Ep. 186: Sergio Tavares – What accountants need to know about Design Thinking

June 13, 2022 | 18 Minutes

Sergio Tavares, PhD., joins host Neha Ratnakar to discuss the importance of design thinking in a digital-first business world and the role management accountants play in driving optimized digital solutions. Sergio is a Lead Service Designer and Designer Coach at Frog, a global creative consultancy.

Connect with Sergio: https://www.linkedin.com/in/lutav/

Full Episode Transcript:
Neha (00:05):

Welcome to Count Me In. I'm Neha Lagoo Ratnakar. And today I'm speaking with Sérgio Tavares about design thinking and why it's crucial for leaders and management accountants to understand the basics of design thinking in a digital-first business world. Sérgio is a design leader at Frog where he researches humans, culture and society to create digital solutions that better meet consumer needs. This is a very interesting conversation as we discuss how management accountants can help shape the metrics and what data designers should be focusing on to alleviate pressure points and deliver better digital solutions. So let's get started with Sérgio.
Neha (00:53):

Welcome Sérgio. It's such a pleasure to have you on the show. Now let's start with the basics for people who might be new to design thinking. Can you give us a simple definition of design thinking?
Sérgio (01:05):

Hi, Neha. Thanks for having me on the show. I think design thinking is a term that came about already in the sixties and it talks a lot about what is the customer need, the end customer need? I think we came from an era of advertising and marketing that we're more trying to persuade the people to want certain things, to consume certain products and design thinking, subverted that by looking into what they really need the things they know they need, but also the things that they don't know yet that they need and supplying these needs.
Neha (01:45):

Wow. Okay. I love that. And I'm totally going to steal that in my next conversation.
Sérgio (01:49):

Neha (01:51):

All right. So I like how design thinking it keeps customers in the center and what are the challenges that companies these days are facing when it comes to this customer centricity?
Sérgio (02:04):

Yes, that's, that's an excellent point. I think many companies are finding a lot of challenge to compete with the startup scene. I think the startup scene is going through a change now. We're a little bit past the move fast break things time. So we are seeing the downfall of the first unicorns we had. We crash Zuckerberg had so many problems with democracy and then the whole thing with the fake news. And there's, there's all the ups and downs with Elon Musk going to Twitter. So there's a lot that is telling us that this first wave or this wave was over and companies are now need to compete in a different way with startups. I think that the challenge that companies are facing is also that startups, they have very well understood that they need to look into the customer needs.
Sérgio (03:07):

And it's very simple for them to do that. They just get out of the building as the jargon says and run interviews fast prototypes and then create their product or improve their product. And then when you come to AB corporation, this is very difficult because there's so much procurement hierarchy and it becomes very difficult to just move very fast. So when it comes to customer centricity, I think that is where startups have an advantage and companies have problem because they need to output the results. They need to push harder, their marketing efforts, their existing efforts, and rethinking their products around the customer is something quite demanding.
Neha (03:53):

Right. Wow. That, that was very insightful. And when you talk about being customer centric, how does that translate to being customer centric within the organization? For example, how does your work at Frog apply this customer centricity internally?
Sérgio (04:10):

Yes. I think the first thing that we come as a Frog consultant, for example, we come to a customer is like, tell me where the research room is. And that usually means that there is no room. And so that means that we need to structure that. So we need to ask first let's run a round of questions, a survey out there to your target customers or to a specific segment you want to work with. And that means also that this research that you order it'll fall into an empty drawer. So you need to create the drawer. You need to create a structure that will catalog and categorize research and put it into use in product development or marketing or on the operations. So I think that's the first thing.
Neha (05:05):

So building the airplane as you fly it.
Sérgio (05:10):

Yes, yes, exactly. That just gives us a bit of speed and it's easier to show that we are getting insights about the customers. We're getting ideas on how to make our product more desirable, viable, usable for customers. And that's usually a good way to start because in corporations, you need to start convincing like the whole hierarchy. So it starts to connect with the KPIs and it starts to need to connect to the financial numbers.
Neha (05:43):

Sérgio (05:44):

So it's not very easy to sell, like, okay, in 10 years this idea will pay off, but you can start by saying, let's discover what we can do to change things right now, and how a better experience, for example, of a digital service will mean less time that people take to let's say, use our product. And that means faster onboarding, and that means more revenue, right? So when you start to create this connection, that's when design thinking connects with financial departments management consultants and so forth. These connections are quite new designers. They were often seen as the creative side, and they are usually with high fly ideas. That won't be very sustainable. But when we start to work with business consultants that that's started to change.
Neha (06:42):

And you're right, the perspective on design is changing everywhere. I've also heard people talk about customer journey maps and our listeners who are many of them are from accounting and finance world, would like to understand how that helps clients with the accounting, most importantly, but also their KPIs, OKRs, metrics and operations, the hard facts of a business.
Sérgio (07:09):

Yes. So the customer journey is basically a map of all the interactions that the end customer goes through when interacting with your product or service. So that may seem very far fetched from accountants, but I would think it's not, for example, in a model that I have developed with the client during this year we have throughout the journey, all the pain points and highlights through the experience. So let's think of a, let's say a bank or an insurance company or any service, really. So you have a person that is first deciding if they're going to buy it, then they let's say in case of an insurance, then you have the time that a person's gonna make a decision. If they're gonna get a more premium account. And then they have another part of their journey where they're actually making a claim.
Sérgio (08:05):

So all these the customer goes through all these, what happens often is that the designers or the people taking care of the product are looking a lot on the customer pains. And they are telling for example, the company customers need to be able to claim very fast for where they have some, a broken, broken device at home. So we need to make this very easy. And then on the other side, you have the accountants, for example, that are saying, look if we make this just immediate, we're gonna have more fraud. So I developed this model where we add to the customer journey, the pressure points that are internal to the company, pressuring the solution stores customers. And then we can have a real timeline of everything we provide to the end customer and all the pressure that the company goes through in a map. So everybody can see the problem on a bird eye view and have a clear understanding of everything that is going on and how we can solve the problems together in alignment.
Neha (09:22):

I love the idea of pressure points. I'd never heard that one before.
Sérgio (09:26):

Thank you. Yes. I think this comes from, from really, and I think that's when we start to be customer centric in our day to day, that we started to listen to our customer, like the companies are saying, yeah, the design team is very happy, but they're not getting their ideas through. When they, even if they pointed out in the customer journey and, and then we came up with this concept that let's use the pressure points, because that's when we have our limitations, like, we simply cannot give this solution for free. Let's say there's a financial pressure here. And also one thing that might be, it'll be very important. The collaboration between accountants, for example and consultants on the business side to tell designers and decision makers, innovators, what are the differences in different OKRs KPIs, and even what is the difference between a lagging indicator or a leading indicator? Because designers, for example, when they're improving the product, they just hear the, the simplest ones, like we need higher revenue. But they can help to discover the root cause of a problem,
Neha (10:43):

Sérgio (10:44):

And the business consultant for the accountant can help them to convert that problem into a metric. And that will be their root metric or their leading indicator. This work is very nascent. I don't see many companies and I've been working in this model with our Milan studio in Italy and exchanging a lot of information with our American studio in San Francisco, it's rare to have the interaction between people that work only with numbers and then people that work only with product development.
Neha (11:19):

And thank you for being that bridge between these two parties. That communication is super important.
Sérgio (11:25):

Yes. I'm trying, I'm trying.
Neha (11:29):

All right. So let me pivot from that to some other things that I've heard in the field of design thinking like prototypes or minimum viable products. And I'm trying to connect that with accounting, for example, which is a very rules-based field. Now, how can what can accounting and finance people learn from the field of design thinking if they had to take some practical tips and start implementing tomorrow to become more design oriented, or more innovative, what is it that they can start doing?
Sérgio (12:02):

Yes. Neha, this is an excellent question. And I think I could say also things that the accounting teams can teach or coach the design teams with. But first I think accountants may benefit from thinking a little bit less on the big scale of what projects can become. So they start to do the number crunching. And if we invest, let's say in this new product, we're gonna be able to see figures break even in five years and so forth. This business case of five years is going really out of style because it's based on a lot of fictions, right? You have very good estimations and such, but the minimum viable product school of thinking and the design school of thinking, say, let's create just a trailer, just the first thing that we can get a signal from the market and see if people respond. If they respond, we can finance the idea for more six months.
Sérgio (13:08):

And and this can go it can save a lot of these initial investments and the CapEx of the whole thing. You don't need to put all the coins in the same basket all the eggs in basket, you can just work with the first signals and, and confirmations. But now we come to the idea, if this, if a company does this once and then twice, and then five, 10 times, they need a system to govern innovation. And that's where accountants would be really valuable. Okay. Because they can create a system, like you said, thinking in systems, like how can we know that an idea is gonna pay off, they need to hit a certain target in certain amount of time. And it's not really a given to understand that people that have sometimes great product ideas, even when they are inside companies, they are not sometimes very good in governing this idea and keeping the tab on KPIs. And I think the accountants may take a role of not being the, the checking department or kind of the red stamp department, but more like the coaches that say, Hey, this is something that you may be able to do, or this is where you need to invest so that you hit your KPI. So you become a mindset of nurturing when you start to really help them to do the accounting, which is what you are best at.
Neha (14:46):

So one last question is is with the companies going remote first, these days, what is, how do you think has design thinking changed the way we think, or has design thinking changed as a result of how companies are changing?
Sérgio (15:03):

Yeah. Well, there's a lot going on in this cultural shift. And what we are seeing now is the rise of a truly hybrid mode of working. And by hybrid, it means, well, let's say our playing field is the workshop. So it's where we take all the very strong knowledge that every stakeholder has in their minds, and try to put together in a board with sticky notes and that kind of stuff. So it's more about organizing the ideas so that we come up with something new. And with remote work, there was like concerns that this process can happen, but they started to happen in online boards like Myro or Neuro. Actually, they start to open new possibilities that people can concentrate a little better in their own individual work, that they can contribute to that along the day. And only later join the workshop. And there is even a mode where we are experimenting now to use the digital board, even if we are in a room because it's just so easy to output more ideas, or then to erase and move,
Neha (16:20):

And also to read sometimes. So it's legible.
Sérgio (16:24):

Exactly, exactly. And there's not that person that will need to take care of all the post-it's right. Or all that kind of operations that the team needs to take upon. Also, it's common that in offices, you need to clear the room after you leave there's confidential information. So all these starts to be solved, and it doesn't mean that sometimes you shouldn't be all together without devices, because there's, there's an added value that to that too, you're able to maybe focus or pay attention to listening to more to each team of the, of the project. So I think there's a hybrid model going on. We are still discovering what it can do for these creative processes. And I think we should try to listen to what the teams are bringing and how they are most productive when working.
Speaker 3 (17:25):

This has been Count Me In, IMA's podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like what you heard, and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website at www.imanet.org.