“Two heads are better than one.” — John Heywood
The organizations that Thomas Lockwood and I researched were not bound by the limitations of their structure or the defined roles people find themselves in. Rather, they invite inclusion, and bring together diverse groups and parties to collaboratively produce mutually benefitting and jointly valued outcomes. Both internally and externally, they deliberately engage people in the act of co-creation, eventually making it a key attribute of their innovative cultures.
The idea of co-creation is not a new concept. In its first forms, it focused on bringing together broader groups of consumers and customers, thereby enabling the provider of a product or service to generate new ideas. It offered a means of bringing together different parties to produce a mutually benefitting outcome. Over time, this resulted in an increased appreciation of the value of understanding the unique experiences and perspectives of customers.
What followed was the acknowledgment and use of co-creation in innovatively thinking about business strategies, structures, systems, and eventually, organizational cultures. Throughout our book, Innovation By Design, there are examples of how organizations use the pull factor to multiply the engagement of the variety of contributors to their design thinking processes.
THE PHILIPS STORY
One of the powerful examples of what happens when an organization takes the idea of co-creation and expands the process to a broader set of participants and applications is Philips, the Dutch technology company that, through its divisions, now focuses its innovation in the areas of health and wellness technology.
Sean Carney is the chief design officer of Royal Philips and is responsible for building the design thinking capabilities throughout the Philips organization. Philips created a branding for their design thinking process. In the spirit of greater involvement, they call their program the Co-Create process framework.
The framework is an embedded component and competency within the company that is forwarded through a company-wide training program and that is part of Philips University and the Philips Business process framework.
Sean joined Philips in 2011, succeeding Philip’s design leader Stephano Marzano. Sean arrived at a time when the company needed to create a shift in its broader business strategy. Over Marzano’s two decades of influence, and following the pioneering design leadership path set by Robert Blaich, Philips had become a design powerhouse and the envy of the product design world. During Marzano’s tenure, Philips Design operated as an internal service provider to the various divisions of the electronics giant, operating essentially as a design agency within the larger organization.
Now the company needed more: a broader and more integrated use of design thinking that would also influence the company’s business strategy.
Integrating design into strategy and practice
Under Sean’s leadership, design has been integrated as a strategy and a practice throughout Philips, contributing to the transformation of the company from being a consumer electronics product and lighting company, into a focused leader in health technology.
This is a dramatic strategic shift and is coupled with how design thinking is now used in the company and its influence on how the company focuses its innovation capability.
The change in separating health technology and lighting also helped move the company from a financial under-performance in 2011 to a return to delivering higher financial returns. According to the Philips Annual Report, in 2016 the company’s net income more than doubled (to €1.5 billion, or $1.8 billion USD) from the previous year and its income from operations increased from €1.0 billion to €1.9 billion, the equivalent of an increase from approximately $1.2 to $2.27 billion USD.
As is often the case, though design thinking is credited with the creation of powerful innovation in products and services, it is also a key contributor to the creation of innovative organizational strategies that result in financial outcomes. As is so often the case with strategies that fall into the realm of human resources and organizational development, and that are difficult to track in terms of ROI and measurable financial value, the results at Philips demonstrate a more-than-significant effect on the financial bottom line.
Design thinking is also a key contributor to organizational transformations that get greater financial results.
Success through co-creation
A key to success in engaging the various groups in the co-creation strategy was recognizing the need to position the training in the Philips Academy, thereby allowing it to be scaled throughout the organization. At that time, HR was building a Philips Academy, and the principles of design thinking fit perfectly into that curriculum. Frans van Houten, the CEO of Philips, who was very intrigued about the use and influence of design thinking, assured that the Academy would receive the proper funding. Design and HR worked together to ensure that design thinking was developed and implemented in the organization properly.
The result was the establishment of a “10%–20%–70%” training model—that is,
- 10 percent of the design thinking team became moderators and co-create leaders,
- 20 percent of the team acted as coaches, and
- 70 percent of the team actively focused on the principle of learning by doing, and co-creating with people internal and external to the company.
Important to the successful and meaningful implementation was that the training was applied on real-life challenges, mainly in the healthcare domain.
The different types of challenges varied in the areas of innovation for business strategy, new value propositions, business transformation, and customer engagements.
Design thinking was used to reframe the challenge of how to compete in the sector and to come up with a shared vision from which both internal groups and external partners and stakeholders could explore possible strategies and value propositions. By working on real-life business challenges, the Co-Create program delivered measurable impact and achieved sustainable change for the organization in the transformation of moving from a product company into a healthcare solutions provider.
Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: email@example.com