research

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BUSN20016 RESEARCH IN BUSINESS, T2, 2017

ASSESSMENT 3

Project Title: Comparative analysis on impact of adopting design thinking on four chosen Australian banks NAME OF THE STUDENT:

Student ID:

Tutor’s name:

Campus:

ASSESSMENT SHEET

Criteria Total marks

Marks obtained

Overall comments

A statement of the problem, research aim, objectives and research questions

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Justification and potential output of the research 10 Conceptual framework 10 Methodology, organisation of the study, project budget and schedule

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Accurate referencing, use of correct English and logical sequences between sentences and paragraphs and a good introduction

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Total = 50 Mark reduction for Turnitin similarity (It's up to the markers and unit coordinator's judgement)

Mark reduction for late submission(5% mark reduction for each day of late submission)

Grand Total= 50 Key to grading and corresponding marking scale: HD (42.5 and above out of 50 marks): Student demonstrates outstanding understanding and interpretation of all aspects of the criteria. D (37.25 to 42.24 out of 50 marks): Student demonstrates excellence in understanding and interpretation of almost all aspects of the criteria with some minor corrections or additions needed. C (32.25 to 37.24 marks out of 50 marks): Student demonstrates very good understanding and interpretation of most aspects of the criteria with some need for additional work, additions or improvement. P (24.75% to 32.24% marks): Student demonstrates good understanding and interpretation of the criteria to warrant the award of a Pass but requires considerable additional work, additions or improvement. F (below 24.7%): Student demonstrates an unsatisfactory understanding and interpretation of the criteria and requires major additional work, additions or improvement to achieve a passing grade.

(Month), (Year)

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Table of Contents 1.0. Introduction ..................................................................................................................................... 3

2.0. Problem statement ............................................................................................................................... 3

3.0. Aim and objectives/research questions .............................................................................................. 3

4.0. Justification and potential output of the research ............................................................................ 4

5.0. Conceptual framework and hypothesis development ....................................................................... 4

5.1. Design thinking definition and use ................................................................................................ 4

5.2. Impact of design thinking .............................................................................................................. 4

5.3. Design thinking in the banking sector ............................................................................................ 5

5.4. Hypothesis development ................................................................................................................ 5

6.0. Methodology ......................................................................................................................................... 6

6.1. Research Approach and sources of data ............................................................................................ 6

6.2. Proposed data collection and analysis techniques .............................................................................. 6

6.3 Organisation of the study .................................................................................................................... 6

6.4. Budget, Project Activities and Gantt chart ......................................................................................... 7

7. References .............................................................................................................................................. 10

Appendix ..................................................................................................................................................... 11

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1.0. Introduction

Working as a manager of engineers, controlling engineering firm projects and leading engineers are the most common career path for students who are studying Management for Engineers. Engineering managers expected to have technical and managerial expertise in overseeing the operation performance of the firm. They also need to be effective leaders to successfully lead project and team. Therefore, they need leadership skills to get the best outcome from the team they are working with. The topic of this project is about impact of design thinking on profitability in banking sector (Clark & Smith, 2008).

In the growing competitive world of businesses, companies are looking for finding strategies to get sustainable competitive advantage to be able to secure customer satisfaction and loyalty. Therefore, many companies started adapting the design thinking as a strategy to sustain radical and user-centric innovation, develop customer intimacy and problem-solving (Liedtka, 2014). Many companies and recently banks have started to adopt design thinking as a managerial strategy to aid them to achieve customer loyalty. By looking at successful companies like apple it can be seen the focus is on customers’ need which led to building loyal customers who pay more for products. Therefore, Banks realized their business is all about customer experience (Tobias, n.d.). To achieve competitive advantage, banks found they need to focus on customer experience and be involved in customer’s decision making. Therefore, they needed to build a culture that all staff seeks to find innovative ways to address customers need (Eyers, 2015).

The organisation of this assignment is as follows. This Introduction forms Section 1 of this research proposal. This is followed by the Problem Statement, Research Objectives/Questions, Justification of the proposed proposal and the expected outcomes which also fall under Sections 2 and 3 respectively. Then, Section 4 comprises Conceptual Framework and Research Hypothesis followed by Methodology in Section 5. Finally, Section 6comprises Organisation of the Study, Gantt chart and the Budget required to carry out the proposal.

2.0. Problem statement

Design thinking is known as a systematic approach to solve the problem in an innovative way and considering customer need. It is a tool to maximizing productivity and re-engineering the process (Lidetka & Ogilvie, 2011). Although several researches have been done on different aspect of design thinking including study on design thinking phases, its potential to maximize innovation in the organizations (Michael, 2014) there is almost no research which can show investing on design thinking can increase profitability of company in the real-world practice. Therefore, this project aims to find out does using management strategic tool called design thinking positively influences profitability of the company. In this report, the focus is on banks in Australia as they have started to adopt Design Thinking as a strategy to satisfy their customers.

3.0. Aim and objectives/research questions

Aim: The aim of this report is to find out the impact of adopting design thinking on company’s profitability based on return on investment. The focus of this report is on service sector and specifically banks in Australia. The analysis would be based on three years period and attempt to answer the questions listed below:

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Research Questions:

RQ1: Does adopting design thinking have impact on profitability of the company (Banking sector)?

RQ2: Will be any difference between different banks who have adopted design thinking?

RQ3: Does the profitability of the bank positively change after adopting design thinking?

4.0. Justification and potential output of the research By reviewing diverse articles, it can be seen that the authors mostly focused on how efficient Design Thinking is in terms of innovation, customer satisfaction and problem solving. There was a very limited study on financial impact of Design Thinking on the company. A study by Siota et al. (2017) focuses on the banking sector but the research is based on output of the banks and it is worldwide. Therefore, there is a gap in the literature about whether investing on Design Thinking is profitable for companies or not and this is main rationale behind this study. [Note: here you need to say why this research essential for further study in terms of the addressing the gaps in literature as well as need for the industry]

All the research questions as identified in the proposal will be answered based on the data collections, findings and analysis that will be carried out for the same. These research outputs will be viewed as important academic work for the problem that has been identified for this research proposal. Also, this research will benefit the end users.

[Note: here you need to say how this research will benefit the end users as well as policy makers in details]

5.0. Conceptual framework and hypothesis development 5.1. Design thinking definition and use In 2011, Liedtka explained design thinking is a strategy which leads to innovative product, service and processes by continuously redesigning the entire process. Later in 2016, Liedtka and similarly Gibbons elaborated the definition of design thinking and explain it as a strategy for problem-solving and innovation by focusing on end users’ needs from their perspective. Design thinking has ten tools including, Journey mapping, assumption testing, rapid prototype, customer co- creation, Visualization, value chain analysis, mind mapping, rapid concept development, learning launches and storytelling (Leadtha, 2016). Dym et. al. (2005) mentions that design thinking strategy helps managers and engineers to get competitive advantage by finding opportunities for business growth as well as innovation. Similarly, Dunne & Martin (2006) emphasis the importance of practicing design thinking by managers. They explain that design thinking helps Managers to think like a designer and find creative solution for problems they face.

5.2. Impact of design thinking Many authors have studied the benefits of practicing design thinking. Design thinking helps firms to innovate by being customer-centric, find solution for problems in an innovative way, defeat growth and strategy issues (Finn Connell & Tenkasi, 2015);(Liedtka, 2011), creating loyal customers (Lieadtka, 2014) and increase profitability (Ward, Runcie, & Morris, 2009).A study conducted by Ward, Runice and Morris (2009) on the impact of design thinking on small businesses in the UK reviles that their turnover dramatically increased after adopting design thinking. He mentioned in his article that ninety percent of the companies believed design thinking was the key to their success. Marshal (2009) states, the innovation created through practicing design thinking are more effective because it considers end users’ need with minimum cost. Later in 2011, the finding of Lieadtka’s research draws similar conclusion. His findings revile that the innovative businesses who are successful, routinely practice the four first above mentioned design thinking tools. These tools assist them to be able to anticipate their customer’s need, through

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uncertainty which is key to get the opportunities, minimize risks by testing their hypothesis. But in contrast with previous authors more than 50% of design thinking innovations for problem-solving in the banking sector were not successful (Siota, klueter, Staib, Taylor, & Ania, 2017).

5.3. Design thinking in the banking sector Many companies have disposition to practice design thinking strategy now a day. They use this strategy to get competitive advantage by being innovative and meeting customers need (Kumar, 2009). Companies can take benefit from design thinking in different areas. For instance, Lieadtka (2014) mentions in his article that an Australian financial service company has used design thinking successfully for internal changes. Also, he examined groups of banks in France who made a group to used design thinking to understand their customers need. But his study doesn’t revile the impact of using design thinking by these banks. To complete Liesdtka study, Siota et al. (2017) in his recent study on design thinking in banking sector conclude that design thinking has positive impact on banks including improving customer relationship and increasing loyal customer. It is also stated that design thinking can have positive impact on revenue of the bank

5.4. Hypothesis development In the light of literature review, this study will test the following proposed hypotheses.

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6.0. Methodology 6.1. Research Approach and sources of data This study has chosen a quantitative research methodology. In research projects, data collection is one of the most important parts. It is crucial to choose the right method to collect data (Polkinghorne, 2005). To conduct this research first it was needed to identify the banks who are using Design Thinking. This data has been collected from banks website which has been mentioned in sampling section. Also, it was needed to know the time that banks started practicing Design Thinking. This information has been conducted through several channels by contacting banks, searching in the websites and articles related to Design Thinking in banking sector (Appendix 1-A). Finally, the monthly data on Net Profit and Market Value has been conduct through Data stream from RMIT university database (See Appendix 1)

6.2. Proposed data collection and analysis techniques Population

The target population for this study are banks in Australia. According to Australian Prudential Regulation Authority (APRA) The numbers of banks is 84. (See Appendix 2)

Sampling

The method of sampling for this research is systematically sampling, consist of banks who are currently having innovation lab and practicing design Thinking. The number of banks are 4. In addition, one bank who is not practicing design thinking has been chosen as control. (See Appendix 2)

Variables and analysis

The objective of this research is to explain relationship between practicing design thinking and profitability of the bank. A positive relationship is expected. Therefore, dependent variable is Return on investment. In addition, Independent variable is design thinking.

This research would be based on quantitative analysis. To conduct quantitative analysis, the ROI of chosen banks has been calculated from their bank annual report. Several tests will be conducted based on ROI including; independent t-test in three years period for each bank who is practicing design thinking with the control Bank. Next, conducting correlation analysis and ANOVA test for the four banks who are practicing Design Thinking in three years period and finally conducting regression analysis for chosen bank for three years before and after adopting design thinking.

6.3 Organisation of the study The organisation of the study is as follows:

• Chapter One will be the Research Proposal as outlined in this assignment. • Chapter Two will describe the Australian major banks and their design thinking framework • Chapter Three will include the details of methodology – literature review, data series and surveys

(data collection methods), observing key indicators of recession and data analysis methods. • Chapter Four will report the Findings and Analysis of the proposed research. • Chapter Five will summarize the important findings and discuss their implications in deign thinking

and strategies to improve the current situation.

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6.4. Budget, Project Activities and Gantt chart The budget for the proposed research is $4000 in order to complete this project within the time

frame (**date ** month **year) as given in the Gantt chart.

This budget has been specified for the following reasons:

 The Literature Review to be undertaken requires the use of textbooks, journal articles and

online resources that are not free of cost. This will cost around $1000.

 Data purchase from secondary sources. This will cost around $2000.

 Data structuring and analysis: This will cost $1000.

In summary,

Purpose Estimated Amount to be Spent

Literature Review $1000

Data Collection $2000

Data Analysis $1000

Total Budget Estimated $4000

Project activities and schedules:

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Gantt chart:

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7. References Clark, K., & Smith, R. (2008). Unleashing the power of design thinking. Design managemen review,

19(3), 7-9. Retrieved August 21, 2017, from http://web.b.ebscohost.com.ezproxy.cqu.edu.au/ehost/pdfviewer/pdfviewer?vid=3&sid=84a8470 8-2ed5-4697-8503-5fa23c63a5ba%40sessionmgr104

Dunne, D., & Martin, R. (2006). Design thinking and how it will change management education: An interview and discussion. Academy of Management Learning & Education, 5(4), 512-516. Retrieved August 21, 2017, from http://web.a.ebscohost.com.ezproxy.cqu.edu.au/ehost/pdfviewer/pdfviewer?vid=1&sid=0a6b681f -f735-4c8e-82cf-7f85df1d5cca%40sessionmgr4009

Dym, C. L., Agogino, A. M., Eris, O., Frey, D. D., & Leifer, L. J. (2005). Engineering design thinking, teaching & learning. Journal of Engineering Education, 94(1), 104-107. doi:10.1002/j.2168- 9830.2005.tb00832.x

Evans, L. (2008). Professionalism, professionality and the development of education profesionals. British Jornal of educational studies, 56(1), 20-38.

Eyers, J. (2015, Jun 21). Why banks are thinking design. the Australian Financial review. Retrieved August 14, 2017, from http://www.afr.com/business/banking-and-finance/financial-services/why- banks-are-thinking-design-20150621-ghthgm

Finn Connell, S. E., & Tenkasi, R. (2015). Research in organisational change and development (Vol. 23). (D. A. Noumair, & A. B. Shani, Eds.) Emrad Group. Retrieved from http://www.emeraldinsight.com.ezproxy.cqu.edu.au/doi/full/10.1108/S0897- 301620150000023005

Gibbons, S. (2016, July 31). Design thinking 101. Retrieved August 23, 2017, from Nielson Norman Group: https://www.nngroup.com/articles/design-thinking/

Kumar, V. (2009). A process for practicing design innovation. Journal of business strategy, 30(2/3), 92. Retrieved August 22, 2017, from http://www.emeraldinsight.com.ezproxy.cqu.edu.au/doi/full/10.1108/02756660910942517

Leadtha, J. (2016, July 22). 10 designing thinking tools: turn creativity and data into growth. (U. Virginia, Producer) Retrieved August 24, 2017, from Darden Ideas to Action: https://ideas.darden.virginia.edu/2016/07/10-design-thinking-tools-turn-creativity-and-data-into- growth/

Leadtka, J. (2014). Innivative ways companies are using design thinking. Strategy & Leadership, 42(2), 40-45. Retrieved August 22, 2017, from https://doi.org/10.1108/SL-01-2014-0004

Lidetka, J., & Ogilvie, T. (2011). Designing for growth: A design thinking toolkit for managers. New York: Columbia Unuversity press.

Liedtka, J. (2011). Learning to use design thinking tools for succesful innovation. Strategy & leadership, 39(5), 13-17. doi:https://doi.org/10.1108/10878571111161480

Liedtka, J. (2014). innivative way componies using design thinking. Strategy and & leadership, 42(2), 41.

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Marshal, J. (2009). The design of business: Why design thinking is the next competetive advantage. Financial Executive International, 12. Retrieved August 24, 2017, from http://go.galegroup.com.ezproxy.cqu.edu.au/ps/i.do?&id=GALE|A215465211&v=2.1&u=cqu&it =r&p=AONE&sw=w&authCount=1

Michael, s. (2014). Driving desired futures: turning Design thinking into real innovation (16th ed.). Germany: Birkhauser. Retrieved August 22, 2017, from http://web.b.ebscohost.com.ezproxy.cqu.edu.au/ehost/ebookviewer/ebook/bmxlYmtfXzY5OTcw MV9fQU41?sid=cff934e7-b28b-4cd1-a083- 566e726af01b@sessionmgr101&vid=0&format=EB&rid=1

Polkinghorne, D. E. (2005). Language and Meaning: Data collection in qualitative research. Journal of Counseling Psychology, 52(2), 137. doi:10.1037/0022-0167.52.2.123

Siota, J., klueter, T. K., Staib, D., Taylor, S., & Ania, I. (2017). How banks can boost their growth through Design thinking in an era of DE-Banking. Design Thinking The new DNA of the financial sector, 7. Retrieved from http://www.oliverwyman.com/content/dam/oliver- wyman/v2/publications/2017/apr/Design_Thinking.pdf

Tobias, J. (n.d.). why banks are using design thinking to win customers. The strategy group. Retrieved Augost 15, 2017, from https://www.thestrategygroup.com.au/why-banks-are-using-design- thinking-to-win-customers/

Ward, A., Runcie, E., & Morris, L. (2009). Embedding innovation: design thinking for small enterprise. Jurnal of Business strategy, 30(2/3), 80-84. Retrieved from http://www.emeraldinsight.com.ezproxy.cqu.edu.au/doi/full/10.1108/02756660910942490

Appendix Appendix Table 1:

Name of the Bank

Link of secondary data (annual report)

Commonwealth Bank

https://www.commbank.com.au/about-us/shareholders/financial-information/2016- results.html https://www.commbank.com.au/about-us/shareholders/financial-information/2015- results.html https://www.commbank.com.au/about-us/shareholders/shareholder- information/2011-2015-annual-reports.html

Westpac Bank https://2016annualreport.westpacgroup.com.au/ https://www.westpac.com.au/docs/pdf/aw/ic/Westpac_FY15_financial_results.pdf https://www.westpac.com.au/docs/pdf/aw/ic/2014WestpacGroupAnnualReport.pdf https://www.westpac.com.au/docs/pdf/aw/ic/2014WestpacGroupAnnualReport.pdf

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ANZ Bank http://www.aspecthuntley.com.au/asxdata/20160503/pdf/01737157.pdf

https://www.shareholder.anz.com/sites/default/files/anz_-_annual_report_2016.pdf https://www.shareholder.anz.com/sites/default/files/2015_annual_report.pdf

Nab Bank https://www.nab.com.au/about-us/shareholder-centre/financial- disclosuresandreporting/reports-and-presentations https://www.nab.com.au/about-us/shareholder-centre/financial- disclosuresandreporting/reports-and-presentations/annual-reports-archive https://www.nab.com.au/content/dam/nabrwd/About-Us/2014-annual-financial- report.pdf

Bank of Melbourne

https://www.bankofmelbourne.com.au/corporate-business/report-centre/economic- outlook

Appendix Table2: Population and sampling

Name of the Bank Practicing Design Thinking

Link of innovation Lab

1. AMP Bank Limited No 2. Agricultural Bank of China

Limited No

3. Arab Bank Australia Limited No 4. Australia and New Zealand

Banking Group Limited Yes http://www.cxdesign.anz.com.au/

5. Australian Military Bank Ltd No 6. Auswide Bank Ltd No 7. BNP Paribas No 8. BNP Paribas Securities Services No 9. Bank Australia Limited No 10. Bank of America, National

Association No

11. Bank of Baroda No 12. Bank of China (Australia)

Limited No

13. Bank of China Limited No 14. Bank of Communications Co.,

Ltd No

15. Bank of Queensland limited Ltd No 16. Bank of Sydney Ltd No

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17. Bendigo and Adelaide Bank Limited

No

18. Canadian Imperial Bank of Commerce

No

19. China Construction Bank Corporation

No

20. China Merchants Co., Ltd No 21. Citibank, N.A. No 22. Citigroup Pty Limited No 23. Commonwealth Bank of

Australia Yes https://www.commbank.com.au/about-us/innovation-lab.html

24. Community CPS Australia Limited

No

25. Community Mutual Ltd No 26. Cooperative Rabobank No 27. Credit Suisse AG No 28. DBS Bank Ltd No 29. Defense Bank Limited No 30. Deutsche Bank

Aktiengesellschaft No

31. E.SUN Commercial Bank No 32. First Commercial Bank No 33. G&C Mutual Bank Limited No 34. Greater Bank Limited No 35. HSBC Bank Australia Limited No 36. Heritage Bank Limited No 37. Hua Nan Commercial Bank,

LTD No

38. Hume Bank Limited No 39. IMB Ltd No 40. ING Bank (Australia) Limited No 41. ING Bank N.V. No 42. Industrial and commercial bank

of China Limited No

43. JPMorgan Chase Bank, National association

No

44. KEB Hana Bank No 45. Macquarie Bank Limited No 46. Mega International Commercial

Bank Co., Ltd. No

47. Members Equity Bank Limited No 48. Mizuho Bank, Ltd No 49. Mystate Bank limited No 50. National Australian Bank

Limited Yes https://www.nab.com.au/sites/business/customer/ventures#team

51. Oversea-Chinese Banking Corporation Limited

No

52. Police & Nurses Limited No 53. Police Bank Ltd No

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54. Police Financial Services Limited

No

55. QPCU Limited No 56. QT Mutual Bank Limited No 57. Qudos Mutual Ltd No 58. Rabobank Australia Limited No 59. Royal Bank of Canada No 60. Rural Bank Limited No 61. Shinhan Bank Co., Ltd No 62. Standard Chartered Bank No 63. State bank of Australia No 64. State Street Bank and Trust

Company No

65. Sumitomo Mitsui Banking Corporation

No

66. Suncorp-Metway Limited No 67. Taishin International Bank Co.,

Ltd No

68. Taiwan Business Bank No 69. Taiwan Cooperative bank No 70. Teachers Mutual Bank Limited No 71. The Bank of New York Mellon No 72. The bank of nova Scotia No 73. The Bank of Tokyo-Mitsubishi

Banking Corporation Limited No

74. The Hongkong and Shanghai Banking Corporation Limited

No

75. The northern trust Company No 76. The Royal Bank of Scotland

PLC No

77. Tyro Payments Limited No 78. UBS AG No 79. Union Bank of India No 80. United Overseas Bank Limited No 81. Unity Bank Limited No 82. Victoria Teachers Limited No 83. Westpac Banking Corporation No https://www.westpac.com.au/about-westpac/innovation/ 84. Woori Bank No 85. No 86. No

http://www.apra.gov.au/adi/Publications/Pages/monthly-banking-statistics.aspx