Design Thinking as a Source of Competitive Advantage: Cellularline and Customer-Centered Innovation

Abstract

Over the last several years the business world has started to pay more and more attention to design thinking and the power it has to drive innovative solutions to complex problems. Born in the field of design, but now widely adopted by companies, design thinking is based on a human-centered approach, which places the user at the center of the creative process (Schallmo, Williams, & Lang, 2018). Tim Brown and David Kelley of IDEO have theorized and promoted this methodology that has the potential, if implemented correctly, to be a key tool for innovation and differentiation in today’s competitive market (Liedtka, 2018). The strength of design thinking lies in the ability to combine empathy, experimentation and continuous iteration to develop products and services that authentically respond to people’s needs. Indeed, even though competitive advantage has long been seen as linked to cost and differentiation strategies, as discussed in classic thinking by Michael Porter (1985), technological change and evolving consumer expectations are making customer-oriented innovation more and more critical to competitive advantage. Academic research has widely demonstrated how companies that manage to integrate a customer-oriented perspective and a culture of continuous innovation are more likely to stand out in the long term (Micheli, Wilner, Bhatti, Mura, & Beverland, 2019). However, what remains a matter of debate is the degree to which design thinking can actually generate and sustain a lasting competitive advantage. When the author explored into the literature on design thinking as a vehicle for innovation and as a driver of competitiveness, one gap stood out since there is no clear and systematic study on whether and how such design thinking result in a sustainable competitive advantage and this is the reason why this thesis aims to answer the research question: To what extent can design thinking generate competitive advantage through a focus on the customer and innovation? The goal is to understand if and how this methodology can become a strategic lever for companies, allowing them to obtain a competitive advantage thanks to its ability to start from the user and develop solutions that are truly in line with their needs, even the less explicit ones. The fundamental principle on which design thinking is based is in fact empathy, or the ability to identify with the customer to understand their needs, problems and deep desires. Thanks to observation techniques and direct interaction with users, companies that adopt this approach are able to generate solutions that go beyond the manifest demands of the market, capturing 5 instead those latent needs that often escape traditional research and development processes (Luchs, 2015). In addition to customer orientation, another key element of design thinking is its culture of continuous innovation, which is based on experimentation, prototyping and the value of feedback. Unlike more rigid and linear models, design thinking involves an iterative process, in which ideas are constantly tested, modified and improved through direct comparison with users (Brown, 2008). Given such nature, this methodology also reduces the risk of developing products and services that are not in line with the real needs of the market and allows companies to quickly adapt to changes, as underlined both in the research of Brown and Martin (2015) and Jaskyte and Liedtka (2022), thus promoting a stronger competitive positioning. To explore this topic, the research will follow a path articulated in different phases. After an in-depth analysis of design thinking, its fundamental principles, reference models and tools used, the existing literature that investigates the link between this methodology and competitive advantage will be examined. Both the favourable perspectives that see design thinking as a key tool for innovation and differentiation, and the criticisms that question its systematic effectiveness and long-term sustainability will be analyzed. Once the theoretical framework has been outlined, the research will focus on a concrete case study. The case analysis will allow us to understand how this methodology is applied in practice and what results it can actually generate. This thesis intends to offer both a theoretical and practical contribution. At the academic level, this work hopes to connect theories of competitive advantage with innovation-related approaches provided by design thinking. At a managerial level, this thesis will try to provide useful insights for managers and companies looking to adopt this methodology in a strategic manner. Indeed, although academic literature has widely explored the role of design thinking as a lever for innovation, highlighting its positive impact on corporate creativity, problem solving and the ability to adapt to change (Liedtka, 2018), few theoretical research have actually demonstrated how design thinking can contribute to generating competitive advantage in practice. Most studies focus on the methodological and theoretical aspects of design thinking, but there is a lack of an in-depth analysis of concrete business cases that show how and under what conditions this methodology has actually led a company to obtain a sustainable competitive advantage in the market. 6 This thesis arises precisely from the desire to fill this gap. The aim is in fact to demonstrate, through a concrete analysis, how design thinking is actually applied in a company and whether its adoption leads to a tangible competitive advantage. To do so, the author will analyze a specific case study: the Cellularline company and the design thinking process applied to improving the overall customer experience in the selection and purchase process of their car phone holders. The choice to analyze Cellularline was not a coincidence. Actually, it was born from the interest in a company that decided to seriously experiment design thinking, going beyond the sporadic use of some of its tools or principles, as often happens in many Italian and European companies. Cellularline, specifically, implemented design thinking in a structured way to enhance the buyer’s experience of car holders for smartphones, a product whose understanding, choice and correct use has always been difficult for the average consumer. Through a process of co-design and field research, the company rethought everything: from the way the product is described, to the packaging and shelf arrangement, trying to make each phase of the customer journey simpler and more intuitive. It is precisely this concrete approach aimed at truly improving the customer experience that makes Cellularline an interesting case study to explore further. Through the analysis of this case, this thesis will try to understand how design thinking can create value for a company, which processes make it effective and which concrete results it can generate. Since attending the University of Gothenburg, learning about its human-centered and solution based approach, the author became interested in design thinking. His deep curiosity about this subject encouraged him to seek out its application in a business environment and to ascertain its true strategic worth in this work.