South African financial services company Nedbank discovered their customers’ real pain points – and how to fix them – using design thinking.
If you’ve sat in on any meeting in a B2C company, you’ve probably heard executives talking about how to really understand their customers’ needs. Company leaders often use phrases like ‘spending a day in the life of our customer’ or ‘customer insights’ – and spend time debating whether the correct description of their intent to understand more about their customers should be described as ‘customer focus’ or ‘customer centricity’. The intent is good, but too often the impact doesn’t actually go as planned. With an organization to run and employees to motivate, attention can too easily swing back inside, focusing on managing the organization rather than paying consistent attention to customer needs.
What if there was a recipe for keeping the focus on the customer? And not just on average customer needs, but on solving specific customer pain points? Nedbank South Africa believes it has found a recipe – and it’s working.
Back to the beginning
Brinsley du Plessis and Douglas Lines, executives in business banking with Nedbank, found a common interest in focusing on the customer. In 2014, du Plessis heard about a method for designing products and services from the customer’s viewpoint, and read as much as he could around the subject. “It was frustrating,” he explains. “I knew enough about what I wanted to achieve, but experimenting with achieving it wasn’t getting me there. It was as if I could see the cake, but couldn’t find the recipe to make it.” Du Plessis’ MBA degree had taught him about three laws of marketing: observe; don’t design around averages; and integrated marketing – but this wasn’t helping him either. Objective observation didn’t help understand real customer pain points; no customer is actually average; and customers play different roles, such as user, influencer or decision-maker – it’s important to understand who is doing what.
Meanwhile, Lines had attended the AMP programme at Duke Business School (Fuqua) and his thinking changed radically as a result. “I learnt about the importance of open-mindedness and curiosity, and about how interconnected things really are,” says Lines. “It had a profound effect on me and my willingness to experiment.” The pair’s mutual dissatisfaction with the status quo was given shape and form when they discovered design thinking. Here was the recipe, experienced by both of them, on a Duke Corporate Education programme in 2016.
Five steps in design thinking
We have understood for a long time that hierarchies don’t respond fast enough to rapid change, and that we need different ways to organize if we are to survive in a Vuca world. But while companies see the need to change, and executives implore their employees to collaborate for the greater good of the firm, change comes hard. In a world where strategy is often emergent rather than a plan to be followed, hierarchy can get in the way. Design thinking offers a five-step process to work together laterally in support of real customer service.
Step 1 Empathize
Deeply understand the needs of the customers for whom you are designing. Customers will often ask for one thing while they actually value something different. The product or service they talk about meets a need – what is that need? Often it is to eliminate problems or irritations – smooth the path, take away the pain, rather than add something new. Understand the values and beliefs driving the need. Build empathy for who these individuals are and what is important to them. Listen to their stories, even if what they tell you they do in the story is different from the way they act in reality.
Step 2 Define
Integrate your empathy findings to describe a particular challenge or need. What is the problem? State it clearly. Too often we fail to understand our customers well enough and so we frame the problem from our point of view, not from theirs. Test the problem with customers: does it have face validity? Are we at the core of the issue? The statement should resonate with customers – but not all customers. Identify the specific customers whose lives will be improved – and understand the specific opportunity in detail.
Step 3 Ideate
This is the step where executives have had most practice – brainstorming ideas to address the issue or challenge. Create as many ideas as possible and don’t judge them one by one, as this is the easiest route to kill creativity. Keep the ideas flowing. It doesn’t matter if the ideas sound crazy or unachievable – the aim is to think widely and deeply. Diverse teams are best equipped for this task.
Step 4 Prototype
Despite years of encouragement, often people are afraid to experiment at work. The advantage with following this process is that permission to experiment – and fail – is built in from step one. It’s an iterative process. Prototype one is likely to be an approximation – rough and ready – to be tested with customers to see if it starts to address the need. It can be physical – an object or a mock-up – but it can also be interactive, like a roleplay or a storyboard. Testing, adjusting and re-testing get us closer to the final offering. This is still a creative process, but it’s time to build in some analysis.
Step 5 Test
This is another iterative stage, as testing will allow you to refine the product or service you are offering. Now be as analytical as you like. Be self-critical in order to make the offering the best it can be. Don’t be afraid of failure – if you have been rigorous in prototyping, have confidence that you are close to an answer now.
Before their foray into design thinking, Nedbank operated, as so many other companies do, along functional lines. This is great for building deep expertise in a firm, but not great at encouraging collaboration and ideas that work for the company as a whole. A solution crafted in one function can often only be implemented to the detriment of another function – for example, salespeople who are successful in inventing new ways to sell more, but perhaps using methods that compliance finds unacceptable.
So, du Plessis and Lines’s first act was to combine product, process and frontline employees into cross-functional teams. “We have created an organizational capability through training 45 people in design thinking,” du Plessis explains. “Combining people from diverse areas of the bank, with differing perspectives, has meant that we are much more creative. This is a good thing – bankers aren’t renowned for their creativity!”
As the teams moved into action, they found that the problem they thought they were addressing often turned out to be the wrong one. The design-thinking five-step process enabled them to uncover the real challenges. People have been trained at all levels, from frontline operatives, through managers and up to the executive committee. “We worked out something important – you can’t lead what you don’t understand,” says du Plessis. “Although the frontline might be the best at understanding customers’ needs, the design-thinking process needs leaders who understand that employees need the time and space to make the process work. It can’t be hurried, and it involves trial and error. As a leader, you need to create the ambience where this is accepted.”
The next step will be to set up a design-thinking unit, to embed the capability in Nedbank.
The proof of the pudding … or cake… in the eyes of the customer
Design thinking has had a real impact on employees. “Working in cross-functional teams allows us to learn a lot from each other,” says Lines. “And it’s important to encourage creativity, even if it’s not directly relevant to an employee’s job description. I recall that one participant, whose job is risk mitigation, came up with an incredible spider diagram addressing a completely different area. She was so excited and motivated by an approach which helps her at work, but also at home.”
Nedbank is using design thinking to address big, knotty internal issues, like centralizing multiple back-offices into one, to serve customers better. The big question is – what impact have they seen on customers?
Schools are big business. Banks are governed – and Nedbank is no exception – by Basel 3 rules on liquidity. Schools are liquidity-rich, yet they don’t need cash on site, so helping them to reduce their cash on site and improve their overall liquidity, while getting more funding onto the bank’s balance sheet, enables a bank to lend more. Sounds like a win-win proposition. Wrong.
Using design thinking to uncover the real need, Nedbank included teachers and educators – their customers – in the process, in pursuit of radical collaboration. By doing this, they quickly discovered that holding cash on school premises (parents pay a lot of cash into schools for trips and other school services) is a risk, as it attracts thieves. But the real pain point for teachers is the administrative overhead of collecting all the money for school trips, remembering who has paid, who is going, and which parents still need to be chased. School outings enrich pupils’ lives, but the administrative burden on teachers reduces time invested in lesson planning – their core job of teaching.
Once it understood the real pain point, Nedbank collaborated with an Edtech partner to create a school app, similar to Uber. This is how it works. The parents associated with a class will receive a notice via the app and can sign up directly – no more need for signing attendance sheets. Parents’ bank accounts or credit cards are linked to the app – just like paying for an Uber cab – so the financial transaction takes place without cash. The app is also linked to Outlook, providing diary management for everyone.
The more perspectives that are included in the initial design-thinking stages, the easier it is to commercialize the outcome, because you are uncovering real demand. “The parents and teachers sell it for us,” says du Plessis. “Everyone is delighted, including us – we have met a real need.” The app will go to the market shortly.
The greater good
Anything that reduces risk on school premises and increases the time teachers spend on teaching – rather than on administration – has to be a good thing. But there’s more. Nedbank is already contemplating the wider ecosystem of the desperate need for free education in South Africa.
“Design thinking helps us to solve problems at a higher level of thinking – it makes you think wider and bigger,” says du Plessis. “This is a thin wedge strategy. It opens our minds to how an app like this might be used to offer free education in the future, especially to children in remote areas.” Giving back and nation building are the next steps on the agenda.
Design thinking seems to be a powerful tool. Used properly, it opens the gateway to innovation that really works for customers. But it also seems to be a recipe for cultural change – changing the way a business thinks about and manages itself. Du Plessis has the last word: “Let’s face it, we wouldn’t have come up with these ideas with our usual stiff-collar banker approach!”
An adapted version of this article appeared on the Dialogue Review website.