Design Thinking: Deep empathy and fast prototyping for utilities seeking outside-the-box solutions

Utilities tend to approach customer solutions by searching for answers to their own problems before considering their customers’ needs and desires. A typical peak load reduction program, for example, is designed to solve a utility’s operational needs but may fail to address any compelling customer desires. Thus, financial incentives, such as bill credits, are required to stimulate customer interest, and rates of participation in such opt-in programs are often low.

While such an approach may result in technically sound solutions, it often leaves utilities wondering why they don’t get the customer traction they want. What if utilities could increase customer engagement — and satisfaction — and still meet their operational and business goals? With “design thinking” they can.

In recent years, many utilities have relied on traditional market research — such as surveys and focus groups — and segmentation strategies as the cornerstones of customer-centric program development. This approach provides valuable insights, but it often misses key, sometimes unvoiced, customer interests and desires. At this critical moment in the evolution of electric utility business models, we believe the Stanford University-developed concept of design thinking offers a powerful new tool for utilities to better understand customers’ needs and develop more successful programs.

As taught at Stanford, design thinking combines deep levels of customer empathy with cross-functional teams and rapid prototyping to develop new solutions for complex design problems. Initially used by Silicon Valley technology companies, such as Apple, to make very user-friendly interfaces, it has since been adopted to fundamentally change customer experiences in a wide range of industries, such as healthcare, online shopping and transportation.

Tim Brown, one of Silicon Valley’s top proponents of design thinking, explained it this way in a 2010 interview in Forbes magazine:

“It’s fine to do a focus group and ask people what they want, but generally they haven’t solved their problems, so they can’t tell you. Value comes from looking first-hand at what people do, understanding what they need and are trying to accomplish and using that knowledge as inspiration for developing new ideas.”

Bank of America’s development of its Keep the Change savings program — in which all debit card transactions are rounded up and the difference is deposited in a person’s saving account — is perhaps one of the better-known examples of design thinking. Back in 2004, the bank was looking for a way to get more women to open checking and savings accounts. The program, which continues to be highly popular, was the result of intensive and iterative brainstorming after in-depth consumer research showed women were both often rounding up transactions on their checking accounts and facing challenges in saving money.

Specific problems, no specific outcomes

The utility industry has been slow to adopt design thinking, due perhaps to the sector’s high degree of regulation and historic aversion to risk. Further, design thinking is all about approaching problem-solving with a very open attitude in which no specific outcomes are assumed, a concept that can be difficult for utilities to fully embrace.

However, the success of design thinking in a broad range of industries — from traditional to high tech — presents a strong argument for utilities to consider it as a way to create programs and experiences that produce positive customer engagement. We believe the model offers new opportunities for discovering the possibly overlooked elements, large or small, that can turn an average product or service into a great customer and utility solution.

Some examples of how utilities might apply design thinking include:

• Reimagining what a community solar value proposition could be
• Understanding how a utility-owned rooftop solar option could be more relevant to middle-income customers
• Designing new rates that customers will embrace and enjoy.

The core of design thinking is empathy, which, in this context, means really immersing yourself, as a designer, in customers’ lives. Why do people act the way they do? What are the hardest problems they face during their day? What causes stress? How do people create workarounds to systems or solutions that don’t work as expected? What delights them? By looking through the lens of empathy, new solutions can emerge.

Cross-functional teams and rapid prototyping are other key elements of the design thinking approach. Cross-functional teams bring different perspectives to the table — an engineer will often view a problem differently than a marketer — resulting in more innovative and robust solutions. For utilities, going cross-functional can also help build buy-in across the organization for new ideas and solutions.

Additionally, the typical utility product development process focuses on creating carefully-developed, complete products before going to the customer. Design thinking takes nascent ideas — concepts, sketches and models — to customers and involves these individuals as co-developers as the team tries out a series of prototypes, which constantly improve the idea. This rapid prototyping process reduces the risk of missing key features and can allow the team to develop a more effective solution in a matter of days instead of months.

Solar Dude and Timid Teri

Another differentiator in design thinking research is that it often focuses on “extreme users,” that is, those on either end of any continuum of customer attitudes and behaviors. These individuals tend to be passionate about their positions, and they have thought more deeply about their way of solving problems and finding workarounds. The input gained from such individuals can spur innovation for designers and the rest of the population.

For example, if we are trying to better understand how to meet customers’ interests and concerns about rooftop solar, we’d start with “extreme” solar users on both ends of the owner continuum. At one end is the guy who is on his third generation of solar panels and knows all about how they work. The “Solar Dude,” as his neighbors call him, has created his own spreadsheet to calculate kilowatt hours of generation and how much carbon and money he’s saved.

At the other end is a person who believes strongly in environmental responsibility, but doesn’t feel confident in her ability to make well-informed decisions. Despite believing rooftop solar would be a good way to reduce her carbon footprint, this “Timid Teri” is hesitant to act because she is afraid of taking a large financial risk.

By spending time with both Solar Dude and Timid Teri, we can gain deeper insights into their unmet and often unvoiced needs, desires, and points of view. We can then frame “how might we” questions:

• How might we make the Solar Dude’s information on net electricity and carbon savings more accessible to him and his friends?
• How might we allow Timid Teri to make a small, low-risk investment in solar?

The quick, obvious answers — an app for Solar Dude, community solar for Timid Teri — are not what we’re looking for here. Rather, in design thinking we don’t create solutions around technologies or the utility’s objectives. Instead, we brainstorm around the customers’ points of view, and then we design for mainstream customers, while ensuring that those solutions will also meet utility goals.

What’s most powerful is when you don’t end up with the obvious options. The result is happier customers, more successful programs, and a stronger brand.

E Source and the Smart Electric Power Alliance (SEPA) will offer a daylong workshop on design thinking for utilities on April 24 in Tucson, as part of the SEPA Utility Conference.  For more information and registration, click here or contact Alanya Schofield at [email protected].

Bill LeBlanc is Chief Instigation Agent at E Source. He can be reached at [email protected].