Influence of organisational culture on the implementation of design thinking

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Influence of organisational culture on the

implementation of design thinking

Master’s Thesis

Business Administration - Entrepreneurship and Innovation Management track Faculty of Economics and Business, University of Amsterdam.

Student: Li Chieh, Chen Student ID:11373512

Supervisor: Dr Ileana Maris-de Bresser

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The statement of originality

This document is written by Student Li Chieh, Chen who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Design thinking is becoming a heatedly discussed method in the business field. It helps organisations generate human-centric innovation that increases a company’s competitive advantage. However, implementing the unique characteristics of design thinking in a company can be challenging and trigger clashes among different organisational cultures, namely hierarchy, market, clan, and adhocracy cultures. Qualitative case study approach is utilised to answer the research question upon how practitioners address these cultural clashes when implementing design thinking. The results of 10 cases indicate that different types of organisational cultures confront different issues. Organisations with a hierarchy or market culture engage in redesigning the business package, building design thinking on existing solutions, sharing information and being more collaborative, choosing the right team, aligning with management, and creating a design thinking environment to address conflicts. Organisations with a clan or adhocracy culture engage in building design thinking on existing solutions, creating a design thinking environment, and changing the organisational culture to address conflicts.

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1. Introduction

Globalisation, advanced technology, the internet revolution, and other changes have led the business world into a new era. These rapid changes have reshaped the commercial landscape and increased the competitiveness of the market (Kedia & Mukherji 1999). In this context, innovation is an important issue in the business field, because outperforming rivals is considered to be a competitive advantage (Lengnick-Hall 1992). Design thinking, as a result, has been introduced as a means of fostering innovation through a systematic model in a company. Initially, design thinking was mainly used for problem-solving in design and architecture fields (Kimbell 2011; Dorst 2011). It was later introduced to the business sphere by IDEO, a leading design consultancy (Martin 2009). This model has proven to support firms in nurturing human-centred innovation in service, products, business models, and so forth (Martin 2009). Consequently, there is a growing interest in what benefits design thinking can bring to an organisation and in how organisations implement it.

Companies adopt design thinking differently based on their needs (Carlgren et al. 2016a). Noteworthy traits such as user focus, problem framing, visualisation, experimentation, and diversity encourage organisations to advance more creative ideas

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and grasp clients’ needs, leading to more innovative outcomes (Carlgren 2016).

However, these same attributes are found to be challenging to implement properly in an organisational setting, leading to clashes (Carlgren et al. 2016b). Common challenges are that design thinking does not fit with existing processes and structures; the resulting ideas and concepts are difficult to implement; the value of design thinking is difficult to prove; design thinking principles and mind-sets clash with organisational culture; existing power dynamics are threatened; new skills are hard to acquire; and the communication style is different. Furthermore, Zijtveld (2015) indicates that ambiguous design thinking processes hinder the success of its implementation. For instance, being truly empathicor discovering customers’ hidden needs is not knowledge that is easy to grasp or easily understood by practitioners. Design thinking can be a double-edged sword because of its distinctive traits.

Organisational culture also plays an essential role in the implementation of design thinking. A matching culture reduces conflicts practitioners encounter; otherwise they may confront a stream of difficulties that hinder their performance (Cameron and Quinn 1999). Organisational culture is commonly defined as the shared norms, values, and beliefs held by members of an organisation (Deshpande and Webster 1989; Cameron and Quinn 1999; Denison 1990; Miron et al. 2004; James et al. 2007). It impacts

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stakeholders’ behaviours and innovation outcomes (Claver 1998; Sarros 2008;

Naranjo-Valencia et al. 2010; Naranjo-Valencia et al. 2011). The Competing Values Framework (CVF) is a widely used model in organisational culture diagnosis that proposes four dimensions for analysing corporate culture: market, hierarchy, clan, and adhocracy. A mismatch between the dominant corporate culture and company systems such as leadership styles, management roles, and corporate strategies may lead to clashes within a company, making practitioners unable to fully perform their jobs (Cameron and Quinn 1999). In this regard, Cameron and Quinn (1999) further suggest six steps for organisational change in order to reconcile organisational culture and company systems. Steps include: reach consensus on the current culture, reach consensus on the desired future culture, determine what changes will and will not mean, identify illustrative stories, develop a strategic action plan, and develop an implementation plan. Doing this helps enterprises diagonose their dominant culture and facilitate cultural changes if necessary.

1.2 Problem definition

Although design thinking and organisational culture are two intensively discussed topics in academia, there is a lack of scholarship on how organisational culture influences the implementation of design thinking and how employees address cultural

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difficulties in the design thinking process. Because more enterprises are incorporating design thinking into their companies, it is essential to outline a holistic perspective on this topic. The main aim of this research is to understand how companies implement design thinking and cope with the cultural conflicts that can result from differences in design thinking principles and an organisation’s cultural values. This leads to the core research question:

Q1: How do practitioners address inconsistent values between an established

culture and the attributes of design thinking?

1.3 Academic relevance

This paper examines the clashes between organisational culture and design thinking and how employees address cultural conflicts. Although some existing research investigates the challenges companies have confronted in design thinking projects (Carlgren et al. 2016b; Zijtveld 2015), few address the solutions to those challenges. Hence, this study intends to explore companies’ reactions to clashes between design thinking attributes and established organisational culture. By doing so, the study contributes a holistic view of organisational culture and design thinking.

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This paper attempts to make two social contributions. The first is to build an understanding of how practitioners tackle the contradictions between corporate culture and design thinking. The second is to outline the influence of organisational culture on design thinking. The study responds to Brown’s (2008) concern that an unsupportive culture may mitigate the success of design thinking projects, furnishing his observations with theoretical and practical proof. Even though this paper does not deliver an ultimate solution, it can be used as a complementary guideline for practitioners regarding organisational factors. This study describes what conflicts to expect before implementing the design thinking method, thus allowing practitioners to prevent the clashes, reduce hindrances and increase the success of design thinking.

1.5 Research structure

This study is structured in six sections. The second chapter explains the concepts of design thinking and organisational culture. This is followed in chapter 3 by the research methodology, which includes data collection, data analysis, and interviewee profiles. Findings and further discussion are discussed in the fourth and fifth chapters. A conclusion and future research direction are presented in the last chapter.

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2. Literature review

2.1 Overview of design thinking”

The term ‘design thinking’ has gained popularity in the business field, where it is viewed as a method for innovation. However, this term originates in the design discipline. A once-predominant perspective stated that the goal of design was to create a physical object; Christopher Alexander (1971) proposed that the ultimate object of

design is form.

In the late 20th century, the view of the objective of design shifts from producing objects toward a way of seeing and seeking solutions to problems. Cross (1982) sees design as a problem-solving ability used to address ill-defined problems. In line with this concept, Simon (1996) conceptualises design as a rational process for solving well-defined problems. He further defines design as the “transformation of existing conditions into preferred ones” (Simon 1996 p. 111). Design thinking is officially introduced for the first time by Rowe (1987), who uses it as a problem-solving approach in architecture and urban planning. Buchanan (1992) further argues that design thinking is a way of thinking to identify and to solve complex and ill-formulated problems.

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Design thinking’s superior ability to solve problems lies in its unique characteristics. Carlgren et al. (2016a) unpack design thinking’s distinctive values into five themes.

1. User focus: Locate the end user as the core subject. This includes having sympathy, being observant, and actively involving potential users throughout the process.

2. Problem framing: Continuously challenge and reformulate problems for alternatives. This includes tolerating ambiguity, being open to unanticipated phenomena, practising future-oriented thinking, and thinking critically.

3. Visualisation: Transform abstract thoughts into tangible things. This includes rapid prototyping, storytelling, roleplaying, and sketching to make ideas more accessible.

4. Experimentation: Experiment and learn from mistakes. This includes tolerating failure and being curious and creative.

5. Diversity: Embrace diversity in terms of people’s backgrounds and expertise. This includes coordinating with different people on the project and collecting data from diverse sources.

2.2 Development of design thinking concepts and models in the business field

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Boland and Collopy (2004) discoveredthe importance of design thinking through an architecture project they collaborated on with the well-known architect Frank O. Gehry. They argue that a manager is not only a decision maker but also a designer when it comes to defining and solving problems. The goal for a manager is not merely to select the best choice from among known alternatives but to continuously look for innovative alternatives to ill-defined problems. Hence, a design attitude is a necessary mentality for a manager to possess in a complex and rapidly changing business environment.

In accordance with this opinion, RogerMartin, dean of the Rotman Business School, further explains that a great business manager is a “designer who can solve the most wicked problems through collaborative, integrative thinking, using abductive logic, which means the logic of what might be” (Dunne & Martin 2006, p. 513). He sees design thinking as a process designers use to approach problems. Design thinking goes through four phases (Figure 1): generalise to analyse and define the problem; generate

ideas to yield a potential solution; predict consequences to project possible results; and test ideas in reality. In this context, design thinking transforms from a way of thinking

about problems to a process of solving them. However, at the time these phases are developed, the design thinking procedure and how to apply it in practice is still ambiguous (Dunne & Martin 2006).

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Figure 1: The cycle of design thinking (Dunne & Martin 2006)

Tim Brown, chief executive officer (CEO) of leading consultancy IDEO, proposes a more detailed model of design thinking and its practical applications in an article in the

Harvard Business Review and in his book Change by Design (Brown 2008; Brown

2009). He categorises the design thinking process into three stages (figure 2).

Inspiration starts by identifying the problem and observing what the end user needs; ideation requires the team to brainstorm and build a prototype; and implementation lets

the team test and launch the ultimate outcome. The process of design thinking is not linear and can be repeated in each stage until a favourable alternative is found. By following this process, a manager is likely to generate a human-centred innovation for a product, service, or business model.

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Figure 2: Design thinking model from IDEO(Brown 2008)

In line with the development of the design thinking model, Liedtka (2011) advocates that the mind-set in the design thinking process is different from a traditional one. Design thinking requires managers to have a mind-set for growth and new opportunities. This model (Figure 3) outlines a clear method for managers to follow:

1. Visualisation: Transform the abstract concept into a tangible visual idea. 2. Journey mapping: Closely observe users’ experiences of involving the product

or service in their lives.

3. Value chain analysis: Find a way to provide added value by analysing the gap of current situation.

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4. Mind mapping: Find a pattern or insight in raw data.

5. Brainstorming: Come up with potential ideas for further developments.

6. Concept development: Filter ideas and develop chosen ones into more rigorous solutions.

7. Assumption testing: Validate the hypothesis underlying the attractiveness of a potential business idea.

8. Rapid prototyping: Prototype the concept into a concrete thing for further evaluation.

9. Customer co-creation: Involve potential users to experience the prototype, and use the results for further improvement.

10. Learning launch: Launch an experimental product in a quick and inexpensive way on the market.

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Figure 3: Design thinking process developed by Liedtka (2011)

By understanding these various concepts, applications, and implementation processes, practitioners have a clearer vision of how to employ design thinking in their work.

2.3 Opportunities and challenges of design thinking in an organisational setting

Design thinking can be employed strategically in an organisation for spurring innovative outcomes or optimising organisational culture (Sato et al. 2010; Lugmayr et

al. 2014; Hawryszkiewycz et al. 2015). For example, Shimano, a Japanese manufacturer, uses design thinking in its research and development (R&D) process to

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provide a customer-centric product (Brown 2008); Aravind Eye Care System, the largest eye care provider in India, has incorporated design thinking in its service development, which has not only successfully discovered an unmet need but also addressed a social issue; and Cirque du Soleil utilises design thinking in performance productions, which has led the company to penetrate an upscale market with brand-new circus performance (Martin 2009).

Apart from deploying design thinking as a way to produce innovativeness, research also shows it can be used as a method to create a positive organisational environment and behaviour. Stephens and Boland (2015) discover that the social nature of design thinking can be a bridge to creating shared aesthetic knowledge among stakeholders. Aesthetic knowledge is defined as a consensus on a future goal across different characters with conflicting interests. This attribute echoes design thinking in terms of collaboration and teamwork, as design thinking requires participants to be more open-minded and co-ordinated. As a result, it reduces perception asymmetry and facilitates generative learning and problem solving in an organisation. Chen and Venkatesh (2013) also find that collaboration is correlated with the successful implementation of design thinking. Research shows that creating a shared vision and language and cultivating a collaboration-centred organisation structure can allow stakeholders to achieve the

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Although more rigorous design thinking models and related studies are discussed in academia, surprisingly those findings do not help managers properly embed design thinking in practice. Lindberg et al. (2011, p. 14) state that ‘an effective design thinking strategy needs well-trained people as well as an organization that supports them instead of slowing them down’. But the issue lies with how to instruct practitioners in design thinking and, furthermore, how to reshape an organisational structure into a supportive environment. Through an interview with Binder Dijker Otte (BDO), a consulting company, Zijtveld (2015) finds that some tacit knowledge is hard to learn from design thinking theory, such as how to be truly empathic and how to explore the unspoken needs of a customer. Moreover, BDO uses a linear approach instead of an iterative one, and the design thinking projects were not truly conducted in a multidisciplinary way among stakeholders. These concepts contradict design thinking theory, indicating the challenges and barriers practitioners may encounter in the process.

The intrinsic rationale is that each organisation adopts design thinking differently in response to its needs and background (Carlgren 2016a). Therefore, finding a way to address the gap between an existing structure and design thinking can be problematic.

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Carlgren (2016b) discovers seven challenges that hinder the applications of design thinking:

1. Misfit with existing processes and structures: Stakeholders find it difficult to adopt design thinking completely when the concepts are different from established process and structure.

2. Resulting ideas and concepts are difficult to implement: The concepts resulting from design thinking are different in character from the opportunities commonly discussed in an organisation.

3. Value of design thinking is difficult to prove: The contribution of design thinking process is problematic to measure.

4. Design thinking principles/mind-sets clash with organisational culture: Design thinking mentality challenges habitual norms. For instance, a risk-averse culture finds it difficult to learn from mistakes and ambiguity through rapid prototyping and tests.

5. Existing power dynamics are threatened: Product development divisions regard design thinking as a threat due to the similarity in function. In addition, design thinking works better in a flat hierarchy, which weakens the authority of managers. 6. Skills are hard to acquire: It is confusing for some employees to use design

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7. Communication style is different: The existing communication style is different from the design thinking ways of communication, such as being more collaborative and embracing differences.

These challenges reveal the distinctive requirements of design thinking that are not common in most organisations (Carlgren et al. 2016b). Although research has specified the conflicts between design thinking and existing organisational cultures, the way companies cope with those imbalanced values has barely been examined.

2.4 Organisational culture

2.4.1 Definition and overview

Organisational culture is widely discussed in different contexts, but it is generally perceived as the norms, shared values, and beliefs held by an organisation’s members (Deshpande and Webster 1989; Cameron and Quinn 1999; Denison 1990; Miron et al. 2004; James et al. 2007). Although, shared values and norms are the most difficult factors to change (Leonard-Brton 1992), organisational culture influences employees’ behaviour, organisational strategy, organisational effectiveness, and other aspects that have a strong impact on innovation outcome (Claver 1998; Sarros 2008; Naranjo-Valencia et al. 2010; Naranjo-Naranjo-Valencia et al. 2011). Hence, academics acknowledge the

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importance of organisational culture as a determinant of innovativeness in organisational settings. Theoretical models of organisational culture assessment have been developed to further understand different types of corporate culture.

Schein (1992) proposes a model that deconstructs organisational culture into three layers: artefacts, espoused values, and assumptions and beliefs. This model highlights the concept of formation of organisational culture. Visible elements such as an organisation’s symbols and clothing are categorised as artefacts; the mid-level, espoused values, represents an organisation’s values, philosophies, and rules of behaviour; and assumptions and beliefs are hidden rules that are not tangible but followed by people unconsciously. Although culture may be intangible, it is a powerful social force within firms.

The model of organisational ideologies is one of the earliest empirical organisational culture models, created by Stewart Harrison. Harrison (1972) characterises organisations as belonging to one of four types, or orientations, of culture:

Power orientation: This culture emphasises absolute power. Centralisation, tight

control, and compliance are common in this type of company.

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Task orientation: The objective of the company is considered to be the priority in this

culture. Things that are not helpful to achieve the goal are undervalued.

Person orientation: Collaboration is the primary spirit in this culture. People are valued

the most in this type of culture.

Another influential corporate culture model is by Deal and Kennedy (1982), who propose a four-quadrant matrix focussing on how the external environment impacts organisational culture. The determinants for the matrix are degree of risk and speed of feedback.

Work hard/Play hard: Rationales are low risk and fast feedback. This culture

emphasises persistence and teamwork.

Tough guy/Macho: Rationales are high risk and fast feedback. These organisations work

on a fast path and take risks. Collaboration is not a focus in this culture.

Process: Rationales are low risk and slow feedback. The feedback is slow, making it

difficult to measure the impact of decisions. Hence, these cultures focus on how they do things instead of what they do.

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on long-term investment and future value, even though it is unknown.

Another highly used framework is the CVF, proposed by Cameron and Quinn (1999), which focusses on both internal and external factors of corporate culture. The model consists of four quadrants divided by two axes, with each dimension contradicting the other aspects. The horizontal axis determines the internal and external environment, and the vertical focusses on flexibility and discretion, and stability and control. The four resulting cultural dimensions (Figure 4) are used to determine an organisation’s culture.

1. Clan emphasises the flexibility and discretion factor with an internal focus. Such cultures value teamwork, employee involvement, and corporate commitment.

2. Adhocracy emphasises the flexibility and discretion factor with an external focus. Such cultures value creativity, entrepreneurship, and risk taking. 3. Market emphasises the stability and control factor with an external focus. Such

cultures value productivity, transaction costs, a monetary motivation, and competitiveness.

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Such cultures value efficiency, formalised structure, and close adherence to rules and regulations.

Figure 4: Competing Values Framework (Cameron & Quinn 1999)

Employees are able to work to their full potential when the dominant organisational culture matches organisational systems such as leadership style, corporate strategy, human resource management, and so forth (Cameron and Quinn 1999). As a result, Cameron and Quinn (1999) propose six transformational steps to complement the CVF in order for a company to balance its organisational culture and systems:

1. Reach consensus on the current culture: Determine the company culture profile

by understanding what corporate culture employees have in mind.

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3. Determine what changes will and will not mean: Highlight the discrepencies

and required changes between the current and preferred cultures; then discuss the meaning of those changes.

4. Identify illustrative stories: Deterimine critical new values to be delivered to

stakeholders in an easily understandable manner.

5. Develop a strategic action plan: Specify certain actions for accelerating the

transformation.

6. Develop an implementation plan: Formulate a transformational plan with a

timetable.

All in all, organisational culture can be important when implementing design thinking projects. The lack of a supportive culture triggers difficulties and hinders practitioners’ ability to fully perform design thinking (Brown 2009).

2.5 Conceptual Framework

Organisations adopt design thinking differently in accordance with their needs (Carlgren et al. 2016a). However, the unique characteristics of design thinking make it challenging for companies to implement it on top of their existing culture (Carlgren et al. 2016b). Cameron and Quinn (1999) suggest that congruence between organisational

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culture and the environment is critical, and a mismatched culture may prohibit the design thinking team from performing to its full potential. Although there is some discussion about the barriers firms may encounter during the implementation of design thinking, it barely addresses how enterprises react to these paradoxes.

In this regard, CVF is suited to explain this research in three ways. First, CVF covers most attributes of organisational culture. This model helps examine and categorise the dominant culture of interviewed companies, as well as their design thinking attributes. These attributes are usually recognised as problem solving ( Liedtka 2015; Rocco 2015), collaboration (Chen and Venkatesh 2013; Stephens & Boland 2015), innovation (Carlgren 2013; Zandvliet 2016), and a human focus (Brown 2009; Scherer et al. 2016), which all fall into the clan and adhocracy dimensions in CVF. Second, this study compares design thinking values with the dominant cultures of target companies in order to recognise the existence of paradoxes. Hence, CVF further helps explain the rationales behind the contradictions, as it highlights the competing values in the dimensions. Third, if inconsistent values are found between organisational culture and design thinking, the organisational change steps Cameron and Quinn (1999) propose along with CVF help explain the actions taken by practitioners.

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Generally, CVF provides a diagnostic tool for organisational culture and rigorous explanations of cultural conflicts and transformational actions. Therefore, CVF has been incorporated into this research to better understand the selected cases. The overall idea of research is shown as figure 5.

Figure 5: Conceptual framework

3. Methodology

3.1 Research design

To fully understand the influence of organisational culture on design thinking and how practitioners react to it, the qualitative research method was selected for this research for two reasons. First, the influence of corporate culture on the implementation of the design thinking process is a relatively new topic. Hence, the qualitative approach

Attributes of Design Thinking Established Culture Implementation of Design Thinking

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is a good fit for studying an under-theorised area (Pistrang & Barker 2012; Yin 2013). Second, qualitative research focusses on understanding and interpreting contemporary human-centric behaviours and phenomena (Gephart 2004; Yin 2015). As this study aims to understand what cultural difficulties practitioners face and how they cope with conflicts, the qualitative research approach is well suited.

A case study is often used in qualitative research and is defined as “an empirical inquiry that investigates a contemporary phenomenon in depth and within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident” (Yin 2009, p. 18). Yin (2009) further suggests some situations in which it is appropriate and preferred to use a case study: 1) The research aims to answer why, how, or when, and 2) the study centres on contemporary phenomena. These traits reinforce the purpose of this research to investigate in depth how current practitioners address cultural conflicts in design thinking projects. Hence, a case study is used in this study.

Because this study aims to discover common behaviours of practitioners managing cultural conflicts, generalisability is taken into account. A multi-case study is suitable because it allows researchers to look for similarities and differences in various cases.

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This helps broaden the scope of the research question (Eisenhardt & Graebner 2007) and enhance the generalisability and reliability for robust theory building (Eisenhardt 1989).

Eisenhardt and Graebner (2007) suggest interviews as an efficient way to collect empirical data. Furthermore, semi-structured interviews empower researchers to ask probing questions for specific detail and allow participants to fully express their perspectives and experiences (Turner 2010). In this study, semi-structured interviews were used to collect empirical data.

3.2 Research method and data collection

Sample selection should not be random but reflect specific research questions (Eisenhardt 1989). As the use of design thinking varies in different positions, divisions, companies, and industries, it was reasonable in this study to involve participants from various backgrounds. Hence, the study includes 10 participants with varying experience in design thinking from four types of cultures, namely hierarchy, market, clan, and adhocracy. Some respondents were approached during guest lectures in the Business Administration programme at the University of Amsterdam, and others were contacted via LinkedIn and Facebook. The interviews took place in person or via Skype for

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45 min each in English and were recorded with permission and transcribed afterward (appendix 4). Some irrelevant and affirmative responses were eliminated from the transcriptions to maintain a clear relationship to the research objectives.

The information about participants and their companies are shown as follow and in figure 6.

Atos

Atos is a multinational IT-based company with more than 100,000 employees worldwide. The company provides high-tech transactional services, cloud services, big data solutions, cybersecurity, and other technology-based solutions. Two interviewees, Interviewee1 and Interviewee2, were from Atos’s Dutch branch, and Interviewee3 was from the German branch. All of them integrate design thinking into their service offerings.

IBM

International Business Machines (IBM) is a technology-based American corporation. It offers cloud services, artificial intelligence solutions, and other technology services in software and hardware markets. With more than 380,000 employees, the company developed IBM design thinking based on the core principles of design thinking. Interviewee4 is a service designer and a design thinking trainer at IBM.

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31 ING

ING group is a Dutch global banking and financial services enterprise. It offers retail banking, commercial banking, investment banking, insurance, and other financial services. More than 50,000 employees work in over 40 branches worldwide. Interviewee5 is part of two teams at ING Accelerator.

ABN AMRO

ABN AMRO is a Dutch international banking and financial services corporation. It is the third largest bank in the Netherlands. It provides commercial banking, investment banking, private banking, retail banking, and other financial services for business and private customers. Interviewee6 is a manager who helps facilitate design thinking method in the company’s innovation centre.

Avast

Avast is an internet security–focussed company based in Prague, Czech Republic. It offers antivirus software, cybersecurity solutions, and other internet-oriented services to both business to business and business to customer markets. Design thinking is integrated into the company’s service and product development. Interviewee7 is the head of the Avast innovation lab.

Info.nl

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generate human-centric solutions. As a result, the company provides design thinking, scrum, and other skills for its customers. Two interviewees, Interviewee8 and Interviewee9, are user experience designers (UX designer), and Interviewee10 is a coordinator on the Internet of Things team.

Case Industry Company

size

No. of interviews

Position of interviewees

Atos Technology > 100,000 3 Executive consultant Business consultant Management consultant IBM Technology >300,000 1 Customer service designer

ING Banking >50,000 1 Service designer

ABN AMRO

Banking > 20,000 1 Innovation manager

Avast Software >600 1 Head of innovation lab

Info.nl Technology agency

>50 3 UX designer

UX designer Coordinator Figure 6: Breakdown of interviewees

In order to gain the most insight from the interviewees, secondary documents (e.g. official websites, news articles, and blogs) were used to adjust the interview questions accordingly before the interviews took place. With the goal of discovering the influence of organisational culture on the implementation of design thinking, interview questions (appendix 1) were separated into four sections. Interviews began with investigating the organisational cultures of the target companies. Based on that, the study then shifted its

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attention to the companies’ applications of design thinking and the cultural conflicts practitioners confronted. This was followed by an investigation of solutions to conflicts and transformational strategies. Example questions are presented below.

Section 1: Determine the current organisational culture

 How would you describe the culture in your company?

Section 2: Understand the applications of design thinking and the cultural

conflicts the practitioners have encountered

 What cultural conflicts have you confronted because of clashes between design thinking values and organisational culture?

Section 3: Understand the way they address those difficulties

 How did you deal with those cultural issues?

Section 4: Determine the company-wide strategy for organisational change

 Is there any company-wide strategy to facilitate the changes?

3.3 Data analysis

Data analysis and data collection occur simultaneously in a case study approach (Eisenhardt 1989; Merriam 2002). The former is the most challenging and most important part in the process of developing a theory in case studies (Eisenhardt 1989). In order to facilitate the analysis procedure, NVivo (a qualitative data analysis software) was employed to analyse raw data. Twenty-five codes were found and further categorised into four themes in the codebook (appendix 2; table 1). Deductive and

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inductive approaches were used in the analysis. First, three priori codes (organisational culture, cultural conflicts, and organisational change steps) derived from the literature were used. The “solutions to conflicts” section was developed through inductive exploration in the coding procedure.

Eisenhardt (1989) further proposes that the combination of within-case and cross-case analysis strategies is suitable for a multi-cross-case study. A within-cross-case analysis is a process for an investigator to familiarise his or herself with a large quantity of information, and it paves the way for cross-case analysis. A cross-case strategy is normally used in a later stage to find patterns. Looking closely at data from divergent perspectives allows researchers to look beyond bias for novel conclusions. This research, hence, uses these two techniques as analysis methods.

The within-case analysis was used in an early stage to classify primary data into various dimensions based on their characteristics. Ten transcriptions, one for each interview, were examined individually to find similar patterns echoing existing codes. Unexpected factors were highlighted for comparison and investigation in a later stage. Cross-case examination was used to investigate the data from a holistic perspective after all interviews were finished; individual cases were compared with other results.

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Similar concepts were clustered into groups and examined for the emerging patterns across coded dimensions.

Table 1: Main themes and subcategories of codes

Main Theme Subcategory

Organisational culture 1. Hierarchy 2. Market 3. Clan 4. Adhocracy Cultural conflicts

1. Misfit with existing process and structures

2. Resulting ideas and concepts are difficult to implement

3. Value of design thinking is difficult to prove

4. Design thinking principles/mind-sets clash with organisational culture

5. Skills are hard to acquire

6. Communication style is different 7. No conflicts

Solutions to conflicts

1. Redesign the business package/measurement 2. Create design thinking environment/opportunity 3. Change the organisational culture

4. Build design thinking on existing solution 5. Share information and be more collaborative 6. Choose the ‘right’ team/project

7. Let people approach you instead of approaching them 8. Align with higher management level

9. Put conflicts aside Organisational

change steps

1. Reach consensus on the current culture 2. Reach consensus on the desired future culture 3. Identify illustrative stories

4. Develop a strategic action plan 5. Develop an implementation plan

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Validity, reliability, and generalisability are three important factors to be carefully taken into account in qualitative research (Farquhar 2012). Construct validity indicates to what extent research studies the objectives which are aimed to be investigated. In order to reduce risks related to construct validity, a rigorous literature review was conducted, as discussed in chapter 2. Following a theoretical logic stream, the interview questions were formed based on the understanding of existing literature. A case study protocol including research agenda, guideline, and interview questions was used to maintain the consistency of research goal. Transcriptions and interpretations of data were confirmed by the informants for correctness and accuracy to achieve internal validity. Research steps and other research-related information are enclosed in the appendix for transparency, strengthening the reliability, or the extent to which research can lead to repeated results in the same situation. Last, generalisability specifies to what extent the results can be applied to other similar situations. Although there are some criticisms about the plausibility to replicate qualitative outcomes in similar conditions, Leonard-Barton (1990) believes that a multi-case study is a solution for increasing generalisability in case study research. Consequently, this study incorporated 10 respondents in different positions in different industries to increase generalisability.

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4. Research findings

Different types of organisational cultures may clash with the characteristics of design thinking differently. Following this logic, this section discusses the findings for different types of cultures, namely hierarchy, market, clan, and adhocracy. Each participant’s corporate culture was categorised as one of the four types at the beginning of the study. Then, the unique cultural conflicts the practitioners confronted in their environment was determined along with the ways in which they tackled those difficulties. Finally, the study explored the strategies and processes they went through to achieve the desired changes.

4.1 Hierarchical culture

The characteristics of a clear decision-making line, risk aversion, many layers, and divisions fall into hierarchical organisation. Three companies, Atos, ING, and ABN AMRO, are in this category. In the interviews, participants were asked to describe their company’s culture. One participant explicitly referred to his organisational culture as

hierarchical. Others discussed their cultures in more subtle ways that implied a hierarchical organisation. For example, all of the interviewees from this culture mentioned that there are many layers and divisions within their organisations and clear responsibilities in each division, team, and project. Interviewee2 underlined that there

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is little co-operation among each teams, and information is not widely spread in Atos.

In this type of organisation, positions are highly recognised and respected. Decisions made by authorities are prioritised even if they contradict other factors. Interviewee6 specified that at ABN AMRO, innovative proposals may be ignored if they clash with management’s ideas. Tolerance for risks is relatively low. Interviewee2 (Atos) indicated

that the company tends to maintain stability rather than encouraging entrepreneurial behaviours in the company. Hence, every decision made is planned and assured up front.

4.1.1 Cultural conflicts

Participants encountered various cultural conflicts during their design thinking projects. These conflicts are discussed here in terms of the categories determined through the analysis as shown in table 2.

Resulting ideas and concepts are difficult to implement/misfit with existing process and structures

One of the problems is a mismatch between the existing organisational process and structure and design thinking. Design thinking focusses more on the explorative process, with problem framing as the core idea instead of jumping to a solution in a short time. However, traditional product development finalises incrementally changed products as

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soon as possible, leading to a clash with design thinking. Interviewee2 (Atos), for instance, faced this issue because the company’s existing process is to launch an end product into the market as soon as possible.

It is also difficult for some companies to implement design thinking because of assessment. Interviewee5 (ING) mentioned outdated financial factors such as the break-even point being used to measure the contribution of design thinking. It is difficult to estimate a result before a project begins, leading to a clash with the organisational process. This issue further hinders practitioners’ willingness to include design thinking

in their daily work, as it can affect their work bonuses. Interviewee5 provided a vivid metaphor to describe the clash at ING:

They still have the KPI (key performance indicator). …. Like I have to get my GPA (grade point average) or have to get good grades on my score. Some of the people got a low grade. So they didn't get their money. They are not rewarded for their actions. That's kind of a big barrier for them to get to the change.

(Interviewee5, ING)

Similar situations occurred at Atos. Interviewee2 stated that budgets are allocated according to the potential benefits projects can bring. However, it is impossible to know the value of outcomes in advance in the design thinking process. Not knowing how design thinking works and what advantages it can bring, management or a financial controller may regard a project as too risky to invest in, especially in a risk-averse culture. This makes it harder for a team to receive enough resources to launch design

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thinking projects. The same idea applies to situations in which design thinking is integrated as a solution for customers. Interviewee3 (Atos) mentioned that if clients do not know what results to expect, it is difficult for them to apply for budgets.

Another problem lies in the time limit. Not understanding the core concept of design thinking, managers may allocate insufficient time for design thinking projects. However, the problem-framing process and the iterative concept of design thinking requires a long time to explore better alternatives. Interviewee6 (ABN AMRO) experienced a situation where an extremely tight timeframe was given for the exploration process.

Value of design thinking is difficult to prove

As mentioned above, design thinking highlights reframing problems continuously instead of jumping to solutions; it is not possible to present the outcome of a design thinking project at the beginning. Interviewee5 (ING) believed that existing ways of estimating innovation are obsolete but indicated that there is no proper way to validate innovation. This situation highlights the perceived ambiguous value of design thinking, leading to this method being ignored.

I think their [management’s] expectations are old fashioned, like the way they measure success of a new product. Where's the business case? When do you break

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even? … They are not trained enough yet to accept the new way of validating innovation. (Interviewee5, ING)

Communication style is different

Communication style is one of the obstacles practitioners face when implementing design thinking in hierarchical organisation. The nature of the hierarchy structure complicates the ease of sharing information and knowledge. Interviewee2 (Atos) found it difficult to know what other teams are doing, and this information gap prohibited him from co-operating with other teams for creative proposals. In the end, it was a disadvantage for the organisation.

Another hindrance is the dominant communication style. Interviewee5 (ING) referred to the fact that people are inclined to follow orders, resulting in some people who are not used to expressing their ideas openly. Interviewee6 (ABN AMRO) found that some people, especially in higher management, are too confident to listen to others and underestimate the importance of diversity and different but beneficial ideas. Another issue lies with customers. Interviewee3 (Atos) observed that if a project is requested by one customer unit, it is typical for a team to be formed with stakeholders only from the requesting unit. This contradicts the diversity of design thinking.

Design thinking principles/mind-sets clash with organisational culture

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42 the new things. (Interviewee 2, Atos)

Hierarchical culture avoids risks and encourages stability, severely diverging from the principle of design thinking. Shared norms and mind-sets are not easy to change overnight. This phenomenon was observed by Interviewee5 (ING) and Interviewee6 (ABN AMRO) in their companies. When people are uncertain about new things, they tend to return to the way they feel comfortable working. This reinforces the difficulties of transforming someone’s mind-set.

To summarise, various kinds of cultural issues arise in a hierarchical organisation when using design thinking. These can be discrepancies with existing organisational systems, ways of communication, and mind-sets. The problem also lies in the nature of design thinking, the value of which is not easily recognised. These aspects cause conflicts in hierarchical cultures.

4.1.2 Solutions to the conflicts

Based on the difficulties the employees discussed above encountered, they developed ways to address the gaps between their organisational cultures and design thinking concepts. These solutions are discussed here in context of the solution dimensions determined in the analysis in table 2.

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43 Build design thinking on an existing solution

In order to address the vague value of design thinking and receive approval to advance the design thinking process from higher management, Interviewee5 (ING) incorporated design thinking with a lean start-up process. The lean start-up method gives more concrete validation for potential results, helping a team present results to receive approval for projects.

Redesign the business package/measurement

Another way to address the ambiguous value of design thinking is to redesign the business package. When uncertainty emerged from the customer’s side, Atos divided the process into different phases. The company went through an explorative stage to establish an idea and quickly prototyped it into a minimum viable product. If the product is desired by the client, it is finalised into an end result in a later stage and is otherwise terminated. Atos charged its clients at every stage instead of charging for the whole process at once to limit the money the clients might lose, hence reducing their risks and resistance.

Share information and be more collaborative

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communication problem together. For Interviewee6 (ABN AMRO), if managers are too confident to realise the importance of diversity, this employee enhances the team by secretly adding members with different backgrounds to the discussion. At Atos, there is an official platform where employees can seek help and be inspired by other experts. This creates a collaborative and sharing environment in the firm.

What we do now is always secretly put a UX designer in the team, because they can visualise the ideas to something, or prototype or whatever. (Interviewee6, ABN AMRO)

Align with higher management level

Some employees chose to align themselves with people who have a say at the management level. By aligning itself with people in a higher position, a design thinking team is likely to receive the resources necessary to embark on its projects. For instance, Interviewee6 turned to her manager for help addressing difficult issues. Her boss knew people with the expertise to fix specific problems, and they have to follow the boss’s order to address a problem. Hence, the difficulties are solved instead of neglected. Especially in a large corporation such as ABN AMRO, it would be extremely hard and time-consuming without access to the right problem solver.

Choose the ‘right’ team/project

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addressing the clashes between the existing and design thinking mind-sets. They try to prevent the clashes from happening instead of tackling them afterward. As a result, they form a team with people who have the right mind-set. Interviewee6 (ABN AMRO) and Interviewee5 (ING) both preferred working with people who are open-minded and embrace opportunities.

Interviewee2 (Atos), however, left the door open to everyone. As it is not compulsory work and design thinking projects consume time, people who join the team are very passionate. As a result, this reduces resistance to the project.

What we are saying is that this is our way of thinking and this is what we like to do. If you can deal with that if you think the same way, please join us, so I don't have to change their mind. (Interviewee2, Atos)

Create a design thinking environment/opportunities

All of the interviewees from hierarchical organisations advocated for the importance of creating a positive environment and providing opportunities for people not familiar with design thinking. That is the way to address most of the cultural conflicts. All of these interviewees held design thinking workshops for teams to reshape their mind-set, but they used different techniques to facilitate the changes. Interviewee6 (ABN AMRO) requests that participants sign onto rules when they join a training; those signatures can be used as proof when participants violate the rules. Moreover, participants are more

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willing to change when they make commitments. Interviewee6 also uses videos and clients’ stories to illustrate the concepts and benefits of design in a more fun and easily

understood way. For Interviewee5 (ING), it is important for employees to know the reasons for doing design thinking, so she always explains the meaning behind the actions to the teams. Participants should have opportunities to experience design thinking first-hand, so she also thinks that using design thinking is the most essential action for learning it.

Both Interviewee6 and Interviewee5 mentioned that the most difficult stage is inviting people to do design thinking who know nothing about it. However, as soon as they experience it, they become more open and attached to this new way of working.

In sum, different techniques were proposed for addressing the clashes. Redesigning the business package and building design thinking on existing solutions are useful for tackling problems that clash with existing systems and for addressing the ambiguity of design thinking. Being more collaborative benefits differing communication styles. But it is important to create an environment for people to learn and experience design thinking.

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Table 2: Cultural conflicts and solutions in hierarchical culture

Hierarchical cultural conflicts Solutions to clashes 1. Mismatch with existing process

and structures

2. Resulting ideas and concepts are difficult to implement

3. Value of design thinking is difficult to prove

1. Redesign the business

package/measurement

2. Build design thinking on existing solution

Communication style is different Share information and be more collaborative

Design thinking principles/mind-sets clash with organisational culture

Choose the ‘right’ team/project

Not specific to particular issue Create design thinking environment/ opportunity

Not specific to particular issue Align with higher management level

4.1.4 Organisational change process

In order to perform design thinking well, some employees consciously or unconsciously change the organisational culture toward the characteristics of design thinking. This echoes the organisational change steps proposed by Cameron and Quinn (1999), which are used in this section to evaluate how the interviewees in hierarchical cultures reported processing the changes at their organisations.

Reach consensus on the current culture and desired future

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consensus on the current and the desired cultures, some companies talk about them together. Nevertheless, it is important to understand the current culture to know if organisational change is necessary. Having a consensus with other members is the first step to change. Interviewee2 realised that his company focussed too much on exploitative behaviour, which means taking advantage of current resource to do small changes for market need, while the trend is requiring more explorative and innovative actions to find disruptive outcomes. This reflection motivated him and his team to make changes.

Identify illustrative stories

It is also important to express desired future concepts with easily understood ideas. Story-telling is a recommended way to visualise abstract ideas, which echoes the core concept of design thinking itself. Both Interviewee6 and Interviewee3 use videos to communicate the spirit of design thinking to stakeholders. Interviewee6 mentioned that revealing the actual customers’ stories were helpful to deliver the ideas to the

stakeholders.

Develop a strategic action plan

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The most common way is to hold workshops to introduce the concepts of design thinking to people who are not familiar with the methodology. All of the interviewees advocated for workshops and trainings. Interviewee5 (ING) also stated that celebrating small successes is a way to motivate people to use design thinking continuously. Interviewee3 (Atos) said that if change starts in one or two teams, the success ripples out toward more stakeholders.

Develop an implementation plan

The last step of organisational change is to develop a timeline for implementing the change. However, not all the companies followed this step. Some companies set a timeline for the change, while some allow it to occur organically.

Most companies change their culture to design thinking systematically. They start by understanding the current situation and desired future and then create a series of strategic plans to foster the cultural changes. Visions of and goals for the changes are delivered to stakeholders through easily understood methods such as story-telling or videos.

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50 4.2 Market culture

Atos is the company falls into this culture. Interviewee1 (Atos) said the company culture is numbers- and sales-oriented. This falls into the category market culture, which focusses on numbers such as transaction costs, sales, profitability, and productivity.

4.2.1 Cultural conflicts

Mismatch with existing process and structures/resulting ideas and concepts are difficult to implement

There is a tendency for Atos to suffer from mismatches with existing processes, and design thinking concepts are difficult to implement. As productivity is a main focus at Atos, the company emphasises searching for standard solutions that can apply to a majority of problems. However, human-centric design thinking highlights the uniqueness of problems and solutions for each project, leading to difficulty yielding a scalable outcome. This results in a cultural difficulty that contradicts the existing process.

Value of design thinking is difficult to prove

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charge their customers by the hour, and the objective of a project to be delivered is written into the contract. However, the iterative process and problem-framing nature of design thinking makes it difficult for consultancies to estimate the value and cost of a project or for clients to understand what results they will receive. Interviewee1 (Atos) stated that it is very difficult to receive sufficient investments and commitments from a client when the result is unknown.

Skills are hard to acquire

The capacity to fully use the design thinking method is an issue at Atos. It focusses on end products and tries to release the end results into the market as soon as possible. However, design thinking pays more attention to users than to functions of products or potential revenue. Due to the lack of this understanding, Atos did not pay much attention on it, leading to insufficient competency to truly understand customers and be empathic toward them. Furthermore, Atos is not familiar with visualising abstract ideas as tangible forms.

To recap, market-oriented cultural contradictions revolve around numbers. It is difficult for a company to calculate the actual contribution of design thinking. Without tangible estimates, it is difficult for Atos and its clients to accept this innovative way of

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working. Furthermore, immature competence increases the difficulties of fully performing design thinking.

4.2.2 Solutions to conflicts

Redesign the business package/measurement

In order to eliminate friction related to value ambiguity, Interviewee1 (Atos) redesigned the company’s business packages. The result-oriented contract shifted to a process-focussed one. The company now does not promise end results of projects but pledges to go through an exploration process and prototyping to find desired alternatives. The new pricing is by process packaging instead of by the hour or a fixed fee. This way of doing business provides Atos more flexibility to incorporate design thinking into its solutions.

Build design thinking on existing solution

To address the clash between existing organisation process and design thinking, Atos built design thinking on its existing solution. The company used design thinking on IT platforms it offers, so people can be creative within the boundaries of those platforms. Combining the advantages of each solution creates room for an explorative mode and a scalable opportunity for the company.

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Share information and be more collaborative/create design thinking environment/opportunity

To equip practitioners with competencies for using design thinking, employees in Atos were encouraged to expose themselves to a design thinking environment. Atos embarked on some trainings and an IDEO e-course in the learning process. In the meantime, the company encouraged employees to learn and inspire others via a global shared platform within Atos to develop employees’ competency for using design thinking.

To sum up, redesigning a business deal can effectively cope with the ambiguous value of design thinking; workshops and design thinking–friendly environments can tackle immature skills. Building design thinking on existing solutions helps eliminate the friction between established systems and design thinking. The overview of conflicts and solutions are presented in table 3.

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Table 3: Conflicts and solutions in market culture

Market cultural conflicts Solutions to clashes  Value of design thinking is

difficult to prove

 Redesign the business package/measurement

 Skills are hard to acquire  Share information and be more collaborative

 Create a design thinking environment/ opportunity

 Mismatch with existing process and structures  Resulting ideas and

concepts are difficult to implement

 Build design thinking on an existing solution

4.2.4 Organisational change process

Reach consensus on the current culture and desired future culture

The motivation for Atos to evolve lies in global trends and changes in customer behaviour and needs. The company has realised that its capabilities will be irrelevant in the near future, so it requires a transformation. Consensus was reached by getting support from higher level managers first, which then spread down to the employee level. Interviewee1 (Atos) proposed the idea of change in a presentation to his manager. Then interviewee1 and his managers read books to learn more about design thinking and delivered the ideas to the employee level.

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Learning courses were used to equip employees with the necessary abilities for design thinking and future change. The fun nature of design thinking was highlighted to facilitate changes, as practitioners at Atos found it more interesting to do things in the design thinking manner.

Develop an implementation plan

No specific timeline or objectives were established; the whole process tends to evolve organically.

In general, market-oriented cultures face number-related issues. It is also difficult to validate the merit of design thinking accurately for both a company and its clients. Furthermore, the solution of design thinking project is not transferable to other projects, leading to poor productivity. As a result, a practitioner addressed this problem by redesigning his company’s business deal and offering a solution within the existing product scope. For transformational changes, it is important to recognise the inconsistency between growing trends and current competencies. This understanding incentivises an organisation to change. Trainings are included to accelerate the changes.

4.3 Clan and adhocracy cultures

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types of culture were often mentioned together by interviewees, and neither dominates the other but are often mixed. The cultural conflicts encountered in these two cultures are also similar. Finally, two cultures echo to the characteristics of design thinking, as the collaborative, diversity-related concepts overlap with clan culture, and creativity, futuristic thinking, and high tolerance of risk are all shared with adhocracy culture. These two cultures are discussed together in this section.

Three of the studied companies fall into these cultures: IBM, Avast, and Info.nl. All of the interviewees from these firms highlighted that their teams are very diverse, and members are from different backgrounds with divergent expertise. At Info.nl, teamwork is not merely about internal collaboration but also external involvement. The company welcomes clients to participate closely in the development process and values clients’ commitments highly. At the same time, these cultures leave room for their employees to be creative and learn via trial and error. The focus is on the learning process instead of mistakes they make.

Interviewee7 (Avast) stated very explicitly that Avast is like a start-up because it is entrepreneurial, innovative, highly adaptable, and highly tolerant toward risk. Interviewee4 (IBM) discussed design culture in her organisation, quoting the new CEO

Influence of organisational culture on the implementation of design thinking