Wharton@Work

April 2022 | 

For a Culture of Innovation, Design Thinking Is Not Enough

For a Culture of Innovation, Design Thinking Is Not Enough

Seeking to create a culture of innovation, where products, services, and processes are continuously created and refined? Eyeing your supply chain or business model for post-pandemic growth and competitive advantages? While often touted as The Answer, design thinking alone won’t get you there.

The popular approach is undoubtedly vital for encouraging creative problem solving at the individual and team level. But design thinking is just one step in developing a culture that supports innovative thinking and strategically extracts value from ideas.

“Innovation is about meeting the strategic needs of the business,” says Christian Terwiesch, co-director of Wharton’s Mack Institute of Innovation Management, “and with today’s scarcity of resources and intensified competition, it is more important than ever. It is not an isolated endeavor, or a search for a headline-making ‘spark of genius.’ If you are looking for exceptional innovation opportunities, and a structured approach for identifying and capitalizing on them, you need to go beyond design thinking.”

Terwiesch and Mastering Innovation: Strategy, Process, and Tools program co-director Karl Ulrich developed an “architecture for innovation” (described in detail here) that has been used by hundreds of firms, executives, and MBA students to identify new drugs, select strategic priorities, develop apps, and create more patient-centric ways to deliver medical treatments. That architecture, explains Terwiesch, has two levels: “The first is on the level of the individual problem solver. How do you generate ideas and encourage creativity? The second is an organization-wide view. We look at the challenges in developing a system in which a collection of ideas can be identified, developed, and commercialized.”

But applying a process to innovation remains a rarity — which makes it a powerful way to create an advantage. IBM recently surveyed 2,000 executives and design practitioners across multiple industries, and found that 40 percent still see design and innovation as “craft” rather than mindset and practice. “It is the leader’s job to provide a framework,” says Terwiesch. “When innovation is managed well, it takes advantage of the creative capacity in every corner of the organization.”

Multi-Level Approach

In Mastering Innovation, participants learn how to create and manage a culture of innovation by first examining the changes in technology, regulations, and consumer preferences that can help identify both new growth opportunities and future competitive threats. They can then isolate one or more as a “need” that requires a solution.

Once a need is defined, idea generation can begin with individuals and/or teams. The potential problem with many approaches at this level is that you can be overwhelmed with a lot of good — but not great — ideas. There is no well-defined method in traditional design thinking, for example, for moving from ideation to prototyping, or even for generating those ideas through a repeatable process (see the sidebar). Terwiesch and Ulrich’s Innovation Tournaments solve that problem by providing a structure for generating ideas, identifying those with the capability of providing exceptional returns, and directing them to meet the strategic needs of the business. They can effectively transform an organization from what Terwiesch calls “an old-school, Wall Street-style innovation culture to a San Francisco-style one.”

Beyond the Tournament: Processes and Tools

Transforming a culture also requires more creative problem-solving skills. Terwiesch stresses that you don’t need to hire more creative people or bring in innovation consultants, but rather help leaders improve their own creative problem-solving skills and develop these skills in and throughout the organization. They include the ability to walk in the shoes of the customer, to turn unmet customer needs into problem statements for development teams, to create and evaluate a broad set of alternative solution concepts, and to quickly validate new concepts in the market.

Ultimately, says Terwiesch, “making innovative projects meaningful — using them to point toward a new strategy, disruption, or open space in the market — requires direction. Leaders need to manage the innovation process from the highest levels to change the culture and the business for the better.”