Design thinking flips traditional technology-product development on its head. The old way is that you come up with a new product idea and then try to sell it to customers. In the design thinking way, the idea is to identify users’ needs as a starting point.
Phil Gilbert is a tall man with a shaved head and wire-rimmed glasses. He typically wears cowboy boots and bluejeans to work — hardly unusual these days, except he’s an executive at IBM, a company that still has a button-down suit-and-tie reputation.
And in case you don’t get the message from his wardrobe, there’s a huge black-and-white photograph hanging in his office of a young Bob Dylan, hunched over sheet music, making changes to songs in the “Highway 61 Revisited” album. It’s an image, Gilbert will tell you, that conveys both a rebel spirit and hard work.
Let’s not get carried away. Gilbert, 59, is not trying to redefine an entire generation. On the other hand, he wants to change the habits of a huge company as it tries to adjust to a new era, and that is no small task.
IBM, like many established companies, is confronting the relentless advance of digital technology. For these companies, the question is: Can you grow in the new businesses faster than your older, lucrative businesses de cline?
Most Read Business Stories
- Boeing overhauls quality controls: more high-tech tracking but fewer inspectors
- The nicest Sears you've ever seen isn't owned by Sears
- Why investors should pay attention to Amazon CEO Jeff Bezos’ divorce
- Alaska Airlines flight diversion leads to a 30-hour nightmare for passengers WATCH
- Facing populist assault, global elites regroup in Davos
Gilbert answers that question with something called design thinking. (His title is general manager of design.) Among other things, design thinking flips traditional technology-product development on its head.
The old way is you come up with a new product idea, then try to sell it to customers. In the design-thinking way, the idea is to identify users’ needs as a starting point.
Gilbert and his team talk about “iteration cycles,” “lateral thinking,” “user journeys” and “empathy maps.” To the uninitiated, the canons of design thinking can sound mushy and self-evident.
But across corporate America, there is a rising enthusiasm for design thinking not only to develop products but also to guide strategy and shape decisions of all kinds. The September cover article of the Harvard Business Review was “The Evolution of Design Thinking.” Venture-capital firms are hiring design experts, and so are companies in many industries.
Still, the IBM initiative stands out. The company is well on its way to hiring more than 1,000 professional designers, and much of its management workforce is being trained in design thinking.
“I’ve never seen any company implement it on the scale of IBM,” said William Burnett, executive director of the design program at Stanford University. “To try to change a culture in a company that size is a daunting task.”
Daunting seems an understatement. IBM has more than 370,000 employees. While its revenues are huge, the company’s quarterly reports have shown them steadily declining in the past two years. The falloff in revenue is partly intentional, as the company sold off less profitable operations. But the sometimes disappointing profits are not, and they reflect IBM’s struggle with its transition. Last month, the company shaved its profit target for 2015.
In recent years, the company has invested heavily in new fields, including data analytics, cloud computing, mobile technology, security, social-media software for business and its Watson artificial-intelligence technology. Those businesses are growing rapidly, generating revenue of $25 billion last year, and IBM forecasts they will contribute $40 billion by 2018, through internal growth and acquisitions.
But IBM’s biggest businesses are still the traditional ones — conventional hardware, software and services — which contribute 60 percent of its revenue and most of its profit. And these mainstays are vulnerable, as customers increasingly prefer to buy software as a service, delivered over the Internet from remote data centers.
CEO Virginia M. Rometty has warned this will be a difficult transition year. It will take time, she says, before IBM’s new businesses are large enough to become engines of growth for the whole company. The strategy, she insists, is the right one. What remains is to move ahead faster.
“People ask, ‘Is there a silver bullet?’ ” Rometty said. “The silver bullet, you might say, is speed, this idea of speed.”
Rometty is pulling other levers to accelerate the pace of change at IBM, but, she said, “design thinking is at the center.”
Recognizing the importance of design is not new, certainly not at IBM. In the 1950s, Thomas Watson Jr., then chief executive, brought on Eliot Noyes, a distinguished architect and industrial designer, to guide a design program.
And Noyes, in turn, tapped others including Paul Rand, Charles Eames and Eero Saarinen in helping design everything from corporate buildings to the eight-bar corporate logo to the IBM Selectric typewriter with its golf-ball-shaped head.
At that time, and for many years, design meant creating eye-pleasing, functional products. Now, design thinking has broader aims, as a faster, more productive way to organize work: Look at problems first through the prism of users’ needs, research those needs with real people, then build prototype products quickly.
Gilbert came to design thinking as a technologist and a software entrepreneur. He helped build Lombardi Software, in Austin, Texas, first as its chief technology officer, then as its president. Over the years, in trying to develop software faster and to improve products, he studied and adopted some design principles of people like David Kelley, chairman of the global design company IDEO and a founder of the Stanford design program.
In 2010, when IBM bought Lombardi Software, with its 220 people, Gilbert had no inkling of what lay ahead for him.
When Rometty became CEO in January 2012, she told her executive team she wanted “to rethink and re-imagine” the experience of IBM’s customers. This was motivated partly by a shift in how businesses were buying technology.
As more purchased software as a service over the Internet, buying decisions were often being made by workers in functional departments — human relations, sales, marketing and data analytics — rather than by a central corporate information-technology office. In this new market, software that was tailored to workers’ needs and could be used without technical help from IT employees would win the day.
At a top-management meeting, Robert LeBlanc, a senior software executive, mentioned that there was a guy in Austin, at a startup IBM had acquired, who was a design and user-experience fanatic.
The need for speed
Since the program began in August 2012, IBM has hired several hundred designers, about two-thirds of them freshly minted college graduates and a third experienced designers. By the end of this year, IBM plans to have 1,100 designers working throughout the company, on the way to 1,500. They are embedded in IBM product teams and work alongside customers in the field or at one of 24 design studios around the world.
IBM has hired designers from top schools like Stanford, Carnegie Mellon, the Rhode Island School of Design and Parsons School of Design. But initially, recruiting required skillful persuasion. When Gilbert first showed up at the graduate design school at Stanford, he was greeted with skepticism.
“These are millennials in Silicon Valley — they think Google is an old company,” Burnett said, recalling their first impression. “To them, IBM was a historical relic.”
IBM’s senior managers have all been through design training. Rometty and her executive team were among the first. The training varies, with executives getting one-day sessions; product managers, a week; and new designers, three-month programs. In all, about 8,000 IBM employees so far have had some in-person training in design thinking. It’s an impressive number, but it’s only 2 percent of the workforce.
How broadly design thinking is being embraced across IBM is hard to say. It is a new, unfamiliar ingredient in the corporate mix. Doug Powell, a leading design expert who joined Gilbert’s team in 2013, said, “It’s not as though the masses of IBM were waiting for us to arrive.”
The incubator for the company’s ambitious experiment can be found in a building on a corporate campus in Austin. Above a sprawling open-plan space, metal tracks fit movable whiteboard walls, creating temporary rooms — “huddle spaces” — for small teams of workers, rarely more than a dozen. The walls are covered with drawings, text and Post-it notes — “idea parking lots,” they’re called.
If teams have to travel and don’t meet for a week or two, the walls come down and are stored in steel transport carts, notes and sketches intact.
The space constantly changes, as teams form or disband, add people or shed them, according to the evolving nature of the work. “In a week, every one of these configurations will be different,” Gilbert observed as he toured the floor.
The work groups assemble from across IBM — hardware, software and services but also from departments like marketing and communications. Customers are often in the mix, especially when collaborating with IBM developers to write cloud software applications. Getting clients into the free-form workspace, Gilbert said, can help “fundamentally change their relationship with IBM.”
John E. Kelly, a senior vice president who oversees several of the new businesses and research, is a 36-year IBM veteran who has experienced plenty of ups and downs and shifts in strategy.
This time, Kelly observed, is different in one way. “In the past, we changed what we were working on, but we were pretty much working the same way,” he said. “Now, we’re changing how we work, too. And the how element is always related to speed.”