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Design Thinking refers to the method of developing a business or product by identifying the problem worth saving. Many startups fail because despite them having a brilliant idea, their innovation is not solving a core problem that the market is facing. The Design Thinking process consists of 5 steps:
- Empathize: involves customer empathy; learn about the customers and what they need and want. Crucial to a human centered process. Gather data, observe and engage people and interview potential customers.
- Define: analyze the responses of customer and define their main problem that needs to be solved.
- Ideate: come up with innovative solutions to address the problem.
- Prototype: build an early representation of the proposed solution.
- Test: test the ideas and the prototype firsthand with customers and collect their responses to improve on the design and concept.
For example, when trying to decide on new products to launch for their Oil for Olay line, P&G decided to employ Design Thinking. They observed consumers in both high-end and mass distribution stores(empathize) and realized that they had overlooked an entire segment of women by only targeting women in their fifties. Next they defined the core problem which was a lack of products meant for younger women. They brainstormed and came up with ideas for various new products that performed different functions to directly fill this market need (ideate). They then tested prototypes, store displays and price points with consumers and finally released a new product range (test) that directly answered the core problem that their customers had and it was designed to answer this need.
Design Thinking alone, however, is not the end of the road. The Lean Startup is then used to turn these hypothesized solutions into business models that can be tested and altered to fit with actual customers to eventually have the best version of the product that correctly addresses the consumers needs and that has a well-known market. Together they cut costs by minimizing the risk of creating and financing a fully developed product that fails upon release.
Why lean Startup? Work Smarter Not Harder
The Lean Startup is a methodology that favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional “big design up front” development. Although the methodology is just a few years old, its concepts—such as “minimum viable product” and “pivoting”—have quickly taken root in the start-up world, and business schools have already begun adapting their curricula to teach them. Learn with practice, spend less time planning and work on your model.
What to do?
- Rather than engaging in months of planning and research, entrepreneurs accept that all they have on day one is a series of untested hypotheses—basically, good guesses. So summarize your hypotheses in a framework called a business model canvas.
- Use a “get out of the building” approach called customer development to test their hypotheses. They go out and ask potential users, purchasers, and partners for feedback on all elements of the business model, including product features, pricing, distribution channels, and affordable customer acquisition strategies.
- Third, develop according to your customer’s need. The most important step in the Lean Startup process is to create a Minimal viable Product (MVP). An MVP is the version of a new product, which allows a team to collect the maximum amount of validated learning (trying out an initial idea, then measuring it to validate the effect) about customers with the least effort. It is the smallest thing (a minimal product with minimal risk) that you can build or produce that can deliver customer value, test your idea, and hence be able to capture some of that value back in return. It saves you from wasting effort building a product and then finding out it’s not worth it, just because you haven’t tested it. The MVP can be created based on a hypothesis that is tested over time and improved. Take facebook as an example, where Mark Zuckerberg didn’t know if people are willing to interact on a social media platform. Hence, he started with Harvard and started testing if students were willing to connect with each other through social media. This was his hypothesis, which was proved to be true and therefore he went on and tested it on other campuses and eventually it took over the world.
Example of a successful MVP- Dropbox: The challenge Dropbox’s team faced when starting was that it was impossible to demonstrate the working software in a prototype form. The product required that they overcome significant technical hurdles. To avoid the risk of waking up after years of development with a product nobody wanted, the team simply made a video explaining how the product worked. The MVP, video, increased the Beta waiting list from 5,000 people to 75,000 people overnight. The MVP validated the assumption that customers wanted the dropbox product.
The Build-Measure-Learn Cycle
The Build-Measure-Learn cycle is a feedback loop that is said to be one of the core components of the Lean Startup methodology. Its goal is to turn uncertainties, assumptions and risks into knowledge or “sure things” that will eventually guide organizations and business towards progress. Through this process, the key unknowns can actually be transformed into knowledge that the startup can use in its product development – and business operations, as a whole. This whole process can also be called an experiment.
Phase #1. BUILD In this phase, the startup’s goal is to build or develop its MVP – “minimum viable product”, or the bare minimum product that can be built for the purpose of testing a number of assumptions, or the hypothesis formulated – as quickly as possible. Before it can do that, however, the startup must first figure out what the problem that needs solving is. Design the experiment. First, you have to build out the details of the experiment and figure out how everything will fit and mesh together. For this, you must have a solid and reliable method of collecting data, meaning the data gathered must be reliable and actionable.
- Build the experiment. In this stage, think simple and small. Many startups tend to go big and complicated on the get-go, and they end up being overwhelmed and unable to handle it. It would be better to build the smallest possible increment that will still be enough for you to use to validate or reject the hypothesis you have made previously.
- Run the experiment. This is where you will collect the data. The most common methods include conducting interviews or distributing questionnaires. In some instances, others may come out with prototypes for testing.
Among the activities that Eric Ries identified as part of the Build phase includes conducting unit tests, usability tests, refactoring, and cloud computing. Phase
#2: MEASURE In this second phase, the startup must then determine whether real progress is being made or not, and this involves measuring the results obtained from the experiment performed during the BUILD phase.
- Data analysis. Analyze the data obtained from the experiment. What happened?What are the implications of the data to your hypothesis? Make a comparison on what you hypothesized to what actually happened
- Data organization. Organize your data in a way that will make it easily understood, and for the whole scenario to be easily comprehended by whoever listens to it.
- Data Presentation. Make your presentation of the data as compelling as possible.You want the members of the organization or the company to be engaged, so make sure you present it in a way that will truly grab their attention and hook them. In order to speed up measuring, Eric Ries suggested conducting activities such as split tests, real-time monitoring, funnel analysis, cohort analysis and search engine marketing, to name a few.
Phase #3: LEARN This is where the startup will have to make a decision based on the measurements accumulated: should it “persevere”, or should it “pivot”? Persevere means carrying on with the same goals, while pivot entails changing or shifting some, or all, of the aspects of the product strategy. Afterward, you would have to document your findings and share them. The questions that are to be asked in this phase include looking into the knowledge that has been obtained. How should that knowledge be preserved? More importantly, what are the next steps that should be taken by the startup? Ries cited several activities for this phase including, but not limited to, conducting customer interviews, split tests, customer deployment, and smoke tests.
The 3 phases of the cycle can be simplified in the following activities.
- Ask whether the new idea of the startup actually solves a problem for the users.
- Quickly come up with an action or a program that will test the idea with the users.Perform reassessment or re evaluation if needed.
- Obtain feedback from your us Focus on getting information that is relevant and will be useful in helping you create the product / service that is wanted or needed by the users.
- Consider the sustainability of the product or service. Will you be able to maintain the current level of engagement or service?
Example: Building a mobile app startup.
Imagine that you are a startup building a mobile application. Your cycle will most likely be as follows:
- You come up with a mobile app idea.
- You create your business model canvas. (BUILD)
- Start talking with customers and ask them what features they are looking for in an app. (MEASURE)
- Obtain the feedback of customers. (LEARN)
- Using the feedback obtained, you will repeat Step 2 and make revisions on the business plan until you get it right.
- Once you get the business plan right, you proceed to the implementation of a prototype, or the MVP (minimum viable product) for testing. (BUILD)
- The prototype is then shown to the customers. (MEASURE)
- Feedback from customers is obtained and learned. (LEARN)
- Repeat steps 6-7-8, making improvements on the prototype until you get the app right.