How Design Thinking can enrich the strategy development process in current organizational context

The organizational context of firms is continuously subjective to change as, for example, new regulations, ever changing market trends (e.g. the shift from ownership to sharing as with the music streaming service of Spotify) and disruptive innovations in technology (e.g. 3D-printing, the ‘cloud’ or ‘the internet of things’) relentlessly alter companies surrounding environment. Which makes that the need for organizations to not only consider these rapid and vastly changes but act upon them is growing quickly. However, in Management and Strategy theory little attention is given to the means to cope with this increasing turbulence in the business environments. In general, the objective of a strategy is to provide clarity and control in contexts characterized by change. Subsequently this should ensure a continuous fit between the organization and its business environment and by doing so, enable the creation of a competitive advantage and eventually a successful organization. Consequently, the increasingly turbulent and uncertain future poses a huge challenge for strategy making, as traditional approaches to strategy development -though often seen as the answer to change and uncertainty- actually assume a relatively stable and predictable world. A knowledge gap has been identified, in both theory and practice, that there are little to no formalized structures of an approach to strategy development that is sufficiently capable to cope with the capricious and turbulent organizational context. This research takes a new perspective on strategy development, that is rooted in the body of knowledge of Design, a field that has a proven track record in dealing with uncertainties provided by change and the complex relationship between people, places and objects. Therefore the objective of this research is to enable organizations to thrive in current organizational context by providing handles to allow flexibility in its strategy development process, which is addressed by the following research question: “How can design thinking enrich the approach to dynamic strategy development in current organizational context?”. It was found that the main aim of this research was essentially the operationalization of both concepts ‘dynamic strategy development’ and ‘design thinking’ in such a way that they can be combined. Moreover, due to the absence of explicit literature on strategy development in current context, the lack of grounded theory on design thinking in business and the fact that both concepts are founded in different paradigms; this research has found to be challenging. In order to overcome these challenges, the research was scoped by means of a case study at Strategy Works, which means that their strategy development process was observed, decomposed and analyzed from a design thinking perspective. A second sense of direction was provided by its initial research question: how its current strategy development processes, its core competence, can be defined and subsequently communicated to its clients. This implied that during the research it was aimed to make the concepts explicit, which subsequently should lead to better understanding and better communication of these concepts. These statements have led to the design of this exploratory research and accompanying approach that was focused on definition of the core principles of these concepts. In order to arrive at a definition of strategy development and design thinking, that is both comprehensive and has scientific grounding, a literature study was executed first. With the literature study, the core principle of strategy development was defined and consequently the challenges that organizations face in strategy making in current organizational is made explicit. It is found that it not necessarily the changes in the organizational context itself that makes strategy development difficult, rather it is the unpredictability of these changes. In order to have strategic foresight, to anticipate changes in the futures and being able to manage and modify the strategy to better fit this future, the strategy developer should be able to manage the vastness of potential useful information, social nature of the process and the continuation of the strategy process; characteristics that define todays strategy development. However, as far as could be established, in the Strategy body of knowledge there has been little formalized, structured and applicable approaches to such a dynamic process. It is argued that handles to such an approach can be found in the field of design, as it is stated by e.g. Buchanan (1992), Cross (2001), Dunne & Martin (2006) and Schon (1983), that dealing with wicked and dynamic situations constitutes the everyday context of any design as practice. Subsequently the concept of design thinking is explored and defined, leading to the nine principles that could be considered guidelines as to understand design thinking and apply this to practice. In order to validate our findings from the literature, an empirical study is performed concerning the relation between strategy development and the principles of design thinking in this process. This empirical study was based on the execution of a single case, exploratory case study, which is considered to be an appropriate method to understand the context depended phenomenon. The case study concerned a strategy development process executed by consultants from Strategy Works, from February 2013 - December 2013, regarding the development of a strategy (i.e. ‘Strategy 2020’). In this research retrospective accounts of participants of the strategy development process in the selected case are used to validate our findings from the literature, stating that design thinking can enrich the strategy development process. To be able to collected relevant data a document analysis was executed as well as personal interview surveys. In this case study it became evident that there were three challenges indeed prevalent in the strategy development process of the organization; the exploration and sense making of the context, social diversity and the notion that the process is dynamic and thus should continue. However it appeared that these challenges are rather interconnected and that it is difficult to consider one without the other, as for example sense making of the context is hindered by the diversity of all the stakeholders and the variety in interpretation of the data. Furthermore it became evident that the main conclusion of this case study can be found on a more abstract level, and concerns the need for structure in the flexibility and ‘fuzziness’ of the process. These insights, together with the literature study allowed us to make conclusions regarding the defined research question. The literature study showed that the main challenges in dynamic strategy development are based on the prerequisite of strategic flexibility in the strategy process; an organizations ability to manage and modify its strategy. This flexibility is required to maintain a strategic fit; the foundation for an organizations sustainable competitive advantage in the turbulent organizational context. In order to so, strategy developers need to have strategic foresight and anticipate changes in the organizational context, interpret these and act accordingly so. Our findings from the empirical research support this statement, as it became evident that the biggest challenge in practice appears to be in enabling a structured way to make the unpredictable future more present and tangible in the strategy process. The difficulty in this flexibility lays in the seemingly ‘unstructuredness’ and lack of credibility of an approach that allows this flexibility. In our theoretical foundations we have found that this can be appointed to the vastness of potentially useful information and exhaustive exploration as well as the social nature of the process (i.e. content complexity and social diversity). However, in practice it appeared that it is not necessarily the amount of information that is considered challenging, rather it is what happens with this data, how to interpret data and knowledge management in general. It was noted that processes concerning these aspects are deemed challenging to stakeholders not familiar with these activities and were considered ‘vague’, ‘fuzzy’ and even ‘magical’. Interpretation of the empirical findings show that this could be appointed to the lack of structure and handles to application to practice regarding these aspects, which reduces its credibility. These statements allow us to conclude that the possible enrichment of a dynamic strategy development by means of design thinking is rooted in its structured approach to the rather ‘fuzzy’ process steps that are required in current strategy development. In a design thinking process the emphasis is on comprehendible process steps with proven credibility to the output of such steps which can remove the seemingly arbitrariness or ‘magic’ from this process. Not only can this include multiple stakeholders that have no experience with such processes to understand its necessity, it also allows them to be involved and provides value to such an approach. In general it could be argued that this can be achieved by making the necessity of characteristics that are required in a flexible process explicit by means of the nice principles of design thinking as defined in the theory. Specifically, when one understands and becomes more of certain cognitive processes, it is stated to improve one’s ability to think about and practice that specific process. Hence, clarity and comprehension of what, why and when design thinking can be used to enable the required flexibility, will result in better application. Moreover, when the dynamicity and flexibility of the strategy process is made explicit, its output and relevance can become more visible, which should consequently increase its credibility.