For corporations, their mantra was different. It was “we know our customers” (this is good, unless you really don’t know what you think you know!). Ideas were drawn on whiteboards, product teams put together and we were promised a beta before the next board meeting. Four months later, it was doing it all over again—this time with more gusto, shinier graphics and extra features. While this made everyone look productive, customers never saw the value in just another “me too” product and time and money was wasted with another unsuccessful product.

In the old days, there was little or no shown empathy for the customer, plans were constructed based on assumptions and gut instincts, and “testing” meant QA and a beta release. Recently, a new paradigm shift has taken place that challenges our old ways of doing things and brings laser focus to customer needs. This customer-centered approach is accompanied by a no-waste policy and ferocious rapid product iteration.

“Business as usual” is slowing changing with the help of three methodologies: Design Thinking, Customer Development and Lean Startup. They are practices that provide a road map to building successful companies and products on purpose rather than by chance. These three methods have so much in common with each other that upon learning about them for the first time, you can’t stop to wonder — “Aren’t they all talking about the same thing?”

Rather than giving a comprehensive analysis of each discipline, I thought it would be helpful to discuss their similarities, emphasizing a new chorus of ideas coming from academicians, designers, corporations and entrepreneurs.

Design thinking has received the most media coverage in the last year with several books out by well known design industry veterans like Tim Brown of IDEO and b-school revolutionaries like Roger Martin. Customer Development and Lean Startup seem to be the new kids on the block, but are gaining attention as tech startups in particular, strive to be more agile, faster to market and more innovative in a world that is increasingly competitive and hungry for all things tech.

While Design Thinking probably isn’t what entrepreneurs think of first when formulating their company’s plans, many larger companies such as GE and Procter & Gamble and business schools like UC Berkeley and University of Toronto have adopted it and made it a part of their curriculum. Even non-profits are using Design Thinking in an effort to help local businesses pick up distressed cities hit hard by the recession.

A close cousin to Design Thinking is Customer Development. Customer Development is a business model for early stage companies first introduced by retired serial entrepreneur and UC Berkeley professor, Steve Blank. Customer Development is promoted as a risk reduction methodology for early stage startups. However, Customer Development isn’t only for entrepreneurs. Its four step approach of Customer Discovery, Customer Validation, Customer Creation and Customer Development can just as easily be applied to any product initiative.

Lean Startup is as the name suggests, about eliminating waste. Waste may be defined as “any human activity which absorbs resources but creates no value.” Lean Startup takes Customer Development and Agile development and combines the two to produce low-burning, fast-releasing, iterative product development. The term was first coined by Eric Ries (a student of Steve Blank) and was born out of three trends:

• The use of open source and free software services
• Agile development methodologies
• Rapid customer-focused iterations

Lean Startup can be used by startups as well as product development teams looking for an efficient, low-burn, customer-goal oriented methodology.

Design Thinking, Customer Development and Lean Startup are summarized as follows:

• Design Thinking – Innovate via customer empathy and rapid prototyping
• Customer Development – Test your assumptions
• Lean Startup – Stay quick and agile with low burn

While they might seem to be saying completely different things, the means to arriving at their messages is more or less the same. In fact, all three teach the following:

Learning and Discovery
If all three practices have anything in common it’s that they are organized around continuous learning and refinement. Many startups might balk at the idea that their first priority be to learn. After all, who has time to learn when there’s a product to be built! They tend to approach it backwards by building the product or service first, and then learning. Unfortunately, by that time they’ve probably burned through all their cash and it’s too late to take advantage of any lessons learned.

All three methodologies put emphasis on defining what the issues are and for who, and doing research up-front before any product launch. The idea is to guide product design on the deeply understood needs, behaviors and attitudes of the customer, not on technology, business needs or on gut instinct. Bottom line: before any building begins, it needs to be proven that a product would solve a problem for an identifiable group of users.

Direct Observation
Steve Blank calls this “getting out of the building”. You have to talk to and observe real people if you want to get real feedback on your business or product assumptions. While surveys and focus groups are helpful, there’s nothing that matches the benefits of being face-to-face with a complete stranger from your target audience. Surveys are helpful, but you’re missing all the hundreds of nuances and ways human beings communicate frustration or pleasure through body language and verbal cues.

Failing Fast
All three practices emphasize failing early and quickly. All three suggest an ideation period where you develop hypotheses and test them rigorously. This enables you to not only fail cheaply, but also to expand and refine ideas via multiple iterations and feedback from your end-users. The idea is to eliminate all the larger issues early while it’s still cheap to do so. Failing isn’t bad as long it’s done quickly and early in the process. In fact, not failing enough in the beginning could be a sign you’re not testing your assumptions well enough.

Test Your Assumptions
Always test your assumptions. Why? Because the sooner you realize a hypothesis is wrong, the faster you can pivot. Eric Ries explains “by testing, each failed hypothesis leads to a new pivot, where we change just one element of the business plan (customer segment, feature set, positioning) but don’t abandon everything we’ve learned.” Many entrepreneurs and business leaders don’t like to test their hypotheses out of fear of being wrong, especially after having already committed several weeks of time and money. All three camps ask, “Why build a company or product on myths when it can be built on facts and knowledge? And anyway, what’s the point of building a product that nobody wants?”

The lesson: test your assumptions every inch of the way and increase your chances for success exponentially. Any company that doesn’t test their assumptions on a continuous basis is simply rolling the dice. While you’re doing it, test for customer validation, usability and feasibility.

Iterative Development
Lastly, all three methods are in agreement when it comes to iterative development. Iterative development allows you to to improve a concept or product in short correcting cycles. Iterations are done quickly with the idea that a concept gains refinement over several re-designs. An example of an iterative cycle is: ideation-design-test-refine (repeat).

While there are many similarities to all three methods, there are also unique elements to both Customer Development and Lean Startup. In general, Customer Development focuses on providing constant feedback, while Lean Startup takes the feedback and goes a step further by applying it to the actual workings of a startup (e.g., technology choices and software development practices). With Design Thinking, the emphasis is mostly on innovating and not surviving.  Nevertheless, Design Thinking also works well on a limited budget and resources, and is excellent for solving “wicked problems” (survival being one of them).

Product and Customer Development Teams
Customer Development suggests that startups have two teams: one for customer development and the other for product development. In reality, they both feed each other to influence decisions, but with Customer Development what product people would normally call the “discovery phase” is done by the customer development team on a continuous basis. This frees-up the product team to focus on the user experience and build while the customer development team provides constant end-user feedback.

MVP (Minimal Viable Product)
Both Customer Development and Lean Startup methods stress the importance of building a “minimal viable product” or one that fulfills the greatest number of customer needs with the least amount of features. If you’re a software engineer, this is music to your ears. The trick is finding the right balance. Too many features and you run the risk of burning through cash and burning out your product team. Too few features and you run the risk of not finding, disappointing or losing customers.

Taking Advantage of Free Stuff and Agile Management Practices
In the past, companies relied on waterfall development practices and licensed software to build their products and services. To counter these time and money burning methods, Lean Startup advocates the use of Agile product development where product builds are done in “sprints” within days or even hours. It also encourages the use of open source technology.

Resources:
The Four Steps to the Epiphany – Successful Strategies for Products that Win by Steve Blank

The Entrepreneur’s Guide to Customer Development by Brant Cooper & Patrick Vlaskovits

The Lean Startup – Low Burn by Design not Crisis by Steve Blank and Eric Ries

The Lean Startup Wiki

Achieving Flow in a Lean Startup by Ash Maurya

What is Lean about the Lean Startup by Eric Ries

The Promise of the Lean Startup by Eric Ries

Lean Thinking by James P. Womack and Daniel T. Jones

Fast Company: Design Thinking… What is That? by Mark Dziersk

Design Observer: What is Design Thinking Anyway? Roger Martin

Harvard Business Publishing: Why Design Thinking Won’t Save You by Peter Merholz

New York Times: Welcoming the New, Improving the Old by Sara Beckman

BusinessWeek: How to Nurture Future Leaders by Venessa Wong

Business Week: How Business is Adopting Design Thinking by Venessa Wong

Business Week: Design Thinking Can Be Learned Interview with IDEO cofounder, David Kelley

Wall Street Journal: Inspired Design is Essential—and All Too Rare by Gary Hamel

Related Posts:
Design Thinking 101

Tips for Startups

Could design thinking really be a management paradigm shift or is it just a bunch of hype? Could it have an impact on businesses and help to solve the world’s most wicked problems? The following is a roundup on design thinking’s tools, methodology and why you should care.

At first, design thinking comes off as being an odd marriage between two very unlikely parties. “As one MBA joked, in his world the language of design is a sound only dogs can hear,” writes brand guru Marty Neumeier.

Design thinking is an innovation process that uses the designer’s sensibility to find unmet needs and opportunities in order to create new solutions that matter to people. Thomas Lockwood, president of the Design Management Institute (DMI), explains that the object is to “involve consumers, designers, and businesspeople in an integrative process, which can be applied to product, service, or even business design. It is a tool to imagine future states and to bring products, services, and experiences, to market.”

In short, design thinking is a methodology to enable innovation. It does this by:

• Supporting the build-up of ideas and outside-the-box thinking
• Taking risks at early stages
• Eliminating fear of failure
• Deeply understanding the customer and their goals, behaviors and attitudes
• Testing ideas early on to gain immediate feedback
• Challenging a product or service’s usability, feasibility and perceived value

While business typically focuses on metrics and analytics, the focus of design thinking is primarily on human-centered goals and invention. Roger Martin in his book, The Design of Business, writes that in the future the most successful businesses “will balance analytical mastery and intuitive originality in a dynamic interplay.” He continues to boldly predict that an “unwavering focus on the creative design of systems, will eventually extend to the wider world. From these firms will emerge the breakthroughs that move the world forward.”

As implied, design and design thinking aren’t just about posters and toasters. Design can be applied to solve the most wicked problems. According to Jennifer Riel, associate director of the Desautels Centre, you know you have a wicked problem if:

• The causes of the problem are not just complex but deeply ambiguous; you can’t tell why things are happening the way they are and what causes them to do so.
• The problem doesn’t fit neatly into any category you’ve encountered before; it looks and feels entirely unique, so the problem-solving approaches you’ve used in the past don’t seem to apply.
• Each attempt at devising a solution changes the understanding of the problem; merely attempting to come to a solution changes the problem and how you think about it.
• There is no clear stopping rule; it is difficult to tell when the problem is “solved” and what that solution may look like when you reach it.
• In order to solve a wicked problem, you must get at the nature of the problem itself, and the way to get at the nature of the problem is through design thinking.

The first tool of the design thinker is observation. What people say is important and this is why so many companies depend on focus groups and surveys. However, the design thinker knows that what people say isn’t as important as what they do:

“An ethnographer attempting to understand how youngsters in China think about their handheld phones would watch them use their phones before even asking a single question. And when appropriate to ask, the question would likely be of the form: ‘I saw you punch one button repeatedly; you looked frustrated. Then you flipped the phone closed and opened it again. Why were you doing that? What were you thinking? How did it make you feel?’ That’s a very different approach from asking, ‘What are the top five things that matter to you about your handheld phone?’”

That question—Martin argues—is for the design thinker.

The second tool is imagination. Design thinkers hone their skills of imagination to pose questions and open up areas unseen before. As Tim Brown writes, “They can imagine the world from multiple perspectives – those of colleagues, clients, end users, and customers (current and prospective). By taking a ‘people first’ approach, design thinkers can imagine solutions that are inherently desirable and meet explicit or latent needs. Great design thinkers observe the world in minute detail. They notice things that others do not and use their insights to inspire innovation.”

Imagination is best fostered when it’s able to work without fear of rejection or failure. The design thinker is able to imagine future possibilities and communicate them. Imagination might be inspired by the challenge of having to work within limitations, by making the complicated, simple or by simply wanting to make a better experience for the end-user. Imagination is the bridge between knowledge and concept.

Configuration, the third tool, starts with a prototype. A prototype can be as simple or complex as needed and is tested early and often in order to get immediate customer feedback before the more expensive production stages of development. It also allows for any big course corrections early in the process when the stakes aren’t high. A prototype can be anything from a hand-drawn wireframe to a fully operating model. “Often the goal is to fail quickly and frequently so that learning can occur.” According to Lockwood, failing in the early stages of a project is a stated objective at Pixar Animation Studios where it “leads to better work done more quickly.”

The design thinking process varies widely with different nomenclatures and number of phases, but more or less includes the following:

• Define – Decide what issues you are trying to resolve and for who
• Research – Find other examples of attempts to solve the same problem and get to know your end-users
• Imagine – Identify the needs, behaviors and attitudes of your end-users and generate ideas to serve them
• Prototype – Configure, expand and refine ideas via multiple iterations and feedback from end-users
• Choose – Review the objective and select the ideas that resonate the most with the end-user
• Implement – Assign tasks, build and deliver
• Learn – Gather feedback and measure success

Mixed into this methodology at all stages is the iterative development cycle: design, test, modify, repeat. “Test early and often” is the mantra of the design thinker.

Design thinkers are not necessarily confined to people who wear black turtlenecks, thin glasses and who were graphic designers in their past life. Design thinkers have a variety of backgrounds including sociology, anthropology, journalism, technology and business. Brown explains that “many people outside professional design have a natural aptitude for design thinking, which the right development and experiences can unlock.” Brown lists the characteristics of a design thinker as:

• Empathy – They can put themselves in other’s shoes and are focused on end-user goals rather than business, technology or aesthetic ones.
• Integrative thinking – “They not only rely on analytical processes (those that produce either/or choices) but also exhibit the ability to see all of the salient – and sometimes contradictory – aspects of a confounding problem and create novel solutions that go beyond and dramatically improve on existing alternatives.”
• Optimism – They are convinced there’s a solution to be found for every problem.
• Experimentalism – Design thinkers pose questions to find new directions and open up unseen areas.
• Collaboration – Design thinking is a collaborative effort that brings people together with a wide range of disciplines, skills and knowledge. Marketers, psychologists, industrial designers, anthropologists and engineers all might be recruited to work alongside each other.

Partly as a result of this integration, design has come a long way in beating back the perception of being the corporate beauty station. In the past it was mostly used by companies to create beautiful annual reports, flashy brochure websites and marketing materials that would standout at trade shows. While creating aesthetically attractive materials has its value, design is much more than the way something looks. Neumeier explains that up until now design has never “been used for its potential to create rule-bending innovation across the board.”

At first glance, the idea of combining design thinking with business strategies doesn’t bode well. Chuck Jones, vice president for global consumer design at Whirlpool says ”Design thinkers are like quantum physicists, able to consider a world in which anything—like traveling at the speed of light—is theoretically possible. But a majority of people, including the Six Sigma advocates in most corporations, think more like Newtonian physicists—focused on measurement along three well-defined dimensions.”

Many design leaders such as Neumeier are also warning businesses that in the 21st century, it’s all too easy to become a commodity. The old way of doing things is crumbling apart—ownership of factories, access to capital, distribution chokeholds, customer ignorance…It gives the phrase “innovate and die” new meaning.

At the same time, design thinking doesn’t claim to be the be-all and end-all for business. Design leaders who before were skeptical about design thinking surviving in a Six Sigma environment are now finding there’s value in bridging the two skill sets. According to Sara Beckman, faculty director at the Haas School of Business at UC Berkeley, companies that are able to bridge both design thinking and Sigma Six approaches will be the most likely to survive: “Design thinking offers tools for exploring new markets and opportunities [and] Six Sigma skills can be applied to improve existing products. Companies that adhere strictly to one or the other risk failure.”

What you need to know about design thinking:

• It’s a methodology to enable innovation
• It’s a collaborative effort that brings people together with a wide range of disciplines
• Focused on human goals
• Based on observation and testing
• Not a replacement for business analytics
• Has the ability to solve “wicked” problems
• Reduces risk
• Doesn’t require a traditional design background (although it helps)

****

Links to articles on the subject:
Fast Company: Design Thinking… What is That? by Mark Dziersk

Design Observer: What is Design Thinking Anyway? Roger Martin

Harvard Business Publishing: Why Design Thinking Won’t Save You by Peter Merholz

Design Thinking Blog Thoughts by Tim Brown

New York Times: Welcoming the New, Improving the Old by Sara Beckman

BusinessWeek: How to Nurture Future Leaders by Venessa Wong

Business Week: How Business is Adopting Design Thinking by Venessa Wong

Business Week: Design Thinking Can Be Learned Interview with IDEO cofounder, David Kelley

Wall Street Journal: Inspired Design is Essential—and All Too Rare by Gary Hamel

****

Recent books on the subject:
The Design of Business—Why Design Thinking is the Next Competitive Advantage, by Roger Martin

Design Thinking—Integrating Innovation, Customer Experience, and Brand Value, Edited by Thomas Lockwood

Change by Design—How Design Thinking Transforms Organizations and Inspires Innovation, by Tim Brown

A Fine Line—How Design Strategies Are Shaping the Future of Business, by Hartmut Esslinger

The Ten Faces of Innovation—IDEO’s Strategies for Beating the Devil’s Advocate & Driving Creativity Throughout Your Organization, by Tom Kelley

The Designful Company—How to Build a Culture of Nonstop Innovation, by Marty Neumeier

Do You Matter?—How Great Design Will Make People Love Your Company, by Robert Brunner and Stewart Emery

****

Other:
Design Management Institute (DMI)

Stanford’s D.School

IDEO

List of the world’s best design programs for integration of design thinking and business

Related Posts:
Help! My Designer Wants a “Discovery Phase”