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What Is Design Thinking and Why Is It Important for Innovation?

With business today being increasingly international in scope, it is more important than ever for professionals and entrepreneurs to learn the language and practice of global enterprise. Innovation and the thinking that influences innovation — design thinking — are two increasingly studied subjects for corporations and business leaders. Let’s explore what design thinking is and how it is tied to innovation.

The History of Design Thinking

For most of the 20th century, analytical thinking dominated organizational management. This led to companies focusing more closely on production and answering more immediate, functional needs with the bottom line top of mind than considering future products and an increasingly diverse and technologically savvy customer base.

As technology and globalization increasingly changed the business landscape, corporations recognized that the old way was leading to stagnation, and disruption was causing some of the biggest names — think Kodak — to lose market share. Kodak had dominated the photography market in previous years but lacked the foresight to provide a product to compete with smaller cameras that allowed users to produce images almost instantly.

Enter design thinking. Tim Brown, considered the forbearer of the approach, defined design thinking: “…a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.”

If you break down the definition to get to its individual parts, you will notice three components in design thinking: people, technology and business strategy.

The three components are central to the three stages of design thinking: inspiration, ideation and implementation. Essentially, you need people to find a problem to be solved, use technology to think about a solution and work within the business structure to put the solution in place.


In order to solve a problem, you must name the problem. Design thinking is a collaborative process that allows workers to move from department silos to a group setting, inviting open conversation. For entrepreneurs and small businesses, this kind of thinking can be more easily implemented due to a leaner organizational structure. Observation is key to this stage, as team members identify issues from the customer themselves, rather than make assumptions based on internal communication. Once the issue has been identified, you then move to possible solutions.


In a design thinking setting, ideation, or the process of determining how to resolve the issue(s) outlined during inspiration, happens in a freeform setting without risk of alienation or judgment. Rather than limit ideas to what has been done before, design thinking encourages team members to consider what can be created with available technological and personnel resources. There are no “bad” ideas in this method, merely what is feasible and what isn’t. Design thinking is an environment that is “conducive to growth and experimentation.” At companies like IBM, the ideation and refinement process may repeat several times before a final solution is decided upon. IBM’s illustration of their design thinking process includes phases titled Observe, Reflect and Make.


After the best resolution is determined, it must be implemented using available resources to fit the company’s existing business strategy. Testing and retesting are required to determine any deficiencies. Ultimately, design thinking allows companies to implement a customer-centric solution with market value through a process that is infinitely replicable.

Design Thinking and Innovation

Now that you have an understanding of design thinking, it is easier to see how innovation follows. The CEO of Pepsi, who is a proponent of design thinking and implemented it globally, said that “design leads to innovation and innovation demands design.” Innovation is a term that is used throughout corporations and can remain undefined as organizations strive to provide the next greatest product. Through design thinking, humans (both the customer and the employee) replace process as the center of innovation. Process easily becomes rote as organizations state that “this is the way it’s always been done.” For a company to drive innovation and become an industry leader, new approaches must be embraced. Design thinking, by virtue of its inclusiveness of different voices, openness to new ideas and embrace of technology, naturally leads to inventiveness and elevates an organization’s ability to outthink the competition.

Managing innovation will be central to your success as a current and future business leader. For more than 30 years, design thinking has pushed organizations to eliminate boundaries between teams, consider what has not been done before and place customer needs at the center of strategy.

Learn more about the FIU online Corporate MBA program.


Fast Company: Design Thinking … What Is That?

Wired: IBM’s Got a Plan to Bring Design Thinking to Big Business

Harvard Business Review: How Indra Nooyi Turned Design Thinking Into Strategy: An Interview with PepsiCo’s CEO

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