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Modern approaches to idea development "SUPER - Start-Up Promotion for Entrepreneurial Resilience
SUPER - Start-Up Promotion for Entrepreneurial Resilience

Modern approaches to idea development


TF_6_EN  

 Title
Modern approaches to idea development

 Keywords
customer centric, human centred, lean start-up, design thinking

 Author
VSE

 Languages
English

 Objectives/goals
Understanding basic principles and process of opportunity development. Introduction to modern idea development methodologies.


 Description
Building a new business is a daunting task. There are so many factors influencing the success that it is hard to have everything in place for the first time. Businesses fail and there is no point in denying it. If you take start-ups – fast growth technology companies, fueled by venture capital – they fail even more often. You can find statistics claiming that only 1 in 10 start-ups succeed. When they fail it is expensive and lot of time and energy is lost. There are two popular methodologies that can improve the odds of succeeding. One is called The Lean Startup and was created with technology startups in mind. Second is called Design Thinking with main focus on innovation and problem solving. They both focus on users / customers as sources of insight and learning. They can help you deliver useful products or solutions that your customers will love to buy.

 Contents in bullet points
- Design Thinking - Lean Start-up - Principles


 Contents


 Module 1

Unit 1


  Design Thinking

Design thinking is a user-driven innovation strategy. It is getting more and more popular during the last decades. Its principles are based on designer methods and approaches. It was developed by the design consultancy IDEO in the late 90s (Kelley & Littman, 2001). It uses detailed research to describe the challenge and identify user needs, in order to create appropriate solutions. It forces you to take a step back and think about big picture. You see a variety of options and are able to make better decisions. It helps you identify user needs in order to create appropriate solutions. If possible Design Thinking advises you to use multi-disciplinary teams. If you invite people with various backgrounds, you can arrive to more innovative and useful ideas. Design thinking utilizes extensive user research. It is mainly qualitative observations and interviews. You engage with potential users and customers to gain insight. The main idea is that you need to gain empathy, if you want to create for someone different than you are.

Steps of Design Thinking

  • Understand

In the beginning, you try to understand all aspects of the area you are working in. You work with secondary sources – existing data like search statistics, existing solutions in other countries, feedback of potential customers.

  • Observe

You engage with potential customers and create your own primary data using interviews, observations and ethnographic research.

  • Point of View

After this you sort all available data and state a challenge for your team. This should be a sentence or few sentences describing what you want to achieve. Teams using Design Thinking often use sentences starting “How might we...”. For example, how might we make online shopping more accessible to elderly people.

  • Ideate

You follow with phase or brainstorming. You try to come up with as many solutions for your Point of view as possible. This is usually team activity, followed by selection of most promising ideas. Team members discuss the ideas. You can select the promising ideas by voting with post-it notes.

  • Prototype

After you have few feasible ideas you proceed to building prototypes. If you are building products, you can use 3D printing to create something you can give to your customers. If your solution is a service, create a scenario that will help your potential customers experience what you want to provide. When you have your prototypes ready, proceed to validation.

  • Test

Let go of your prototype physically and emotionally. Keep in mind that products are not valuable, the feedback you receive that is valuable. Observe how your respondents use and misuse your prototype.

Design thinking is iterative methodology. This means you fluently move between the phases of the process. Maybe based on the test you find out you need to brainstorm new ideas. Or maybe during creation of the prototype you need to adapt your point of view.

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Plattner et al., 2006

The process of Design Thinking can be described as 3 activities; looking, understanding, making. Looking stands for observing human experience. You follow with analysing challenges and opportunities and understanding them. Finally, you envision future possibilities and proceed to making them happen.

Design Thinking is interesting methodology because it is shifting between modes of thinking on team level. There two basic modes of thinking. Divergent when you brainstorm alternatives and you search for variety of solutions. On the other hand, you have a convergent mode of thinking. That is a traditional problem solving mode. You take your knowledge, experiences and narrow down the options and search for one unique solution. You start with divergent understanding and empathy. You follow with convergent definition of the challenge. You ideate possible solutions in divergent mode and proceed with convergent prototyping and testing. We are used to traditional convergent problem solving. With clear goal in mind we take our experiences and opinions and create a solution. In divergent phases (understanding, ideation) Design Thinking forces you to research and brainstorm variety of solutions. This opens your mind and you have more options to pick from in convergent phases. It could be hard to switch between these mind-sets alone, that is why Design Thinking offers you various tools that foster those modes of thinking. Both modes of thinking are important. Divergent is coming up with ideas and search for option. Convergent is analytical evaluation and selection of the best ideas or opportunities. We can’t do both at the same time. We need to teach our brain to switch between them. Design Thinking process is offers a structure you can follow with your team.



  The Lean Startup

The Lean Startup is an innovation method for startup companies. It takes lean manufacturing principles and transfers them to non-manufacturing context. Key idea is that the most efficient innovation is the one for which there is an actual demand by the users. The biggest initial focus were software startups. Currently the encompasses also global corporations and social businesses. The biggest waste is creating a product or service that nobody needs.

Startup is defined as a human institution designed to create new products and services under conditions of extreme uncertainty (Ries, 2011). This means not all new ventures are startups and on the other hand department in a big company could be a startup. Technology founders are great in building products and utilizing technology, some of the unfortunately forget about customers. If you focus too much on the technology or product, you might end up with product that no one needs. You wasted time and money with no chance on return. Lean Startup stresses the importance of solution development based on the real customer needs. This focus on needs and problems helps founders create useful and meaningful products.

Lean Startup advises to constantly validate assumption. There is this famous quote of Steve Blank: “Get out of the building.” It is very risky to work on something for a year without talking to potential customers. Lean Startup method is obsessed with constant validation. Even very early in your entrepreneurial process, you can create pay per click or Facebook advertising campaigns linked to your landing page and gather emails from users with interest. This is a simple test of your assumptions. You can compare the amount of people in the different steps. This gives you rough idea of potential of your idea. Great way to test your idea and to receive startup financing is crowd funding. You can engage potential customers on sites like Kickstarter or Indiegogo well before your product is delivered. You set amount you want to raise and future rewards for people that contribute to your project. If you raise the amount and only then, you receive the money and start to work on the product. Crowd funding is like e-shop where people are buying future products. You need to persuade them about your idea and that is the hard task. This way of financing is not for every business idea, but if you think it might work for your opportunity, go for it.

 

In the early stages of the process you can gather feedback of potential customers with minimal landing pages, paper prototypes. Anything you can show to your customers and let them interact with brings you data for decision making. This way you will validate your assumptions about customer behaviour, needs and preferences. If you create something based on that, you lower the failure risk of your venture, because they will want your product. In the customer validation phase, you check if customers are buying the product and the market is large enough for a viable business (Cooper & Vlaskovits, 2010). Your goal is to find validation of “product – market fit” and to answer the question if the developed product is something that people want (Maurya, 2012).

 



  Build, Measure

Build, measure & learn is another core principle of the Lean Startup. The aim is to build a continuous feedback loop with customers during product development cycles (Maurya, 2012). You try to test core business assumptions early in the product development process, sometimes even before any product is built at all. The cycle could also be regarded as a classical scientific hypothesis-metric-experiment cycle that starts with the learning goal (theory or hypothesis) and ends with an experiment (prototype) to test the hypothesis. On a meta-level, it could be applied to the entire process of company development. On micro-level, it could be applied to specific details (like a colour of a signup button). It is possible to zoom into sub-processes and execute the lean learning cycle also for smaller design decisions. For example, you think people will click on red button signup button rather than green one. You use it as your hypothesis and you build a website with red and green button or do A/B test with two user groups. Based on the number of clicks you decide which design to utilize in your product.

 

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Source: Ries, 2011

 

 



  Comparison of Design Thinking and Lean Startup

Lean Startup begins with an idea. Design Thinking starts with a problem or question and ideas are developed in the process. Business Model is not part of Design Thinking, but is important part of Lean Startup. Design Thinking uses more qualitative methods like interviews, shadowing and observations. Lean Startup focuses on metric-based analysis – you measure a lot of things. Typical methods of Lean Startup are Split (A/B) Tests, Lean Canvas. Based on Lean Canvas you test hypothesis that is not a focus of Design Thinking.

 

Both methods focus on innovation. They want to deliver useful and meaningful products or services. Keep in mind that they are not solutions to everything. They can help you to navigate but the final solutions are yours. Don’t over estimate their potential. They are just recipes but you need to cook. Design Thinking and Lean Startup are not just processes but consist also of tacit elements, like practices, experiences, specific mind-sets, and company cultures (Thoring & Müller, 2011). It doesn’t matter that much which one you choose, or whether you use combination of the two. Important is how you use them with your team. Feel free to tweak the techniques based on you needs. Following are principles that are key for new ventures. You can search the keywords online and you will find lot of information about specific application of the principles.



  Principles

The principles of both methods are similar.

  • Focus on customers / users
  • Prototyping and testing
  • Iterations


  Customer Research

At the heart of both approaches are users and customers. You need to gain insight in order to create something useful and meaningful. You can start with observations. Spend some time in the environment of your customers. This will give you the initial understanding. You can follow up with interviews. Try to understand what is important to your customers and how can your product or service fit into their life.



  Prototyping

Based on your customer research you identify areas where you can help them. You brainstorm possible solutions. These are future building blocks of your business. This can be 3D printed mock-ups in case of product, beta version in case of a software or scenarios for service. You do all this to show something to selected customers. They can tell you a lot in the interviews, but you need real reactions to validate your assumptions. Answers are thought out responses, but interaction with the prototype gives you behavioural feedback. You see instant reaction. You observe how they act and think what could be changed. Based on this learning you improve the product be sure it will be appreciated by customers, because you based it on their behaviour.



  Validation

Validation is related to your business opportunity. You should test added value of your product, various pricing strategies, payment options and distribution channels. Based on those tests you will be able to decide, if you can build a sustainable business with your solution. Validation is crucial part of both Design Thinking and Lean Startup. It tells



 Results

At the end of this course you will understand two most used human centred innovation strategies. You will be able to use the principles in your idea development and company growth. Useful links: Lean Startup http://theleanstartup.com/ Design Thinking http://www.ideou.com/pages/design-thinking

 Bibliography

· Blank, S. (2006). The four steps to the epiphany. 1st ed. [Pescadero]: [KetS Ranch].


· Cooper, B. and Vlaskovits, P. (2010). The entrepreneur's guide to customer development. [S.l.]: Cooper-Vlaskovits.


· Kelley, T. and Littman, J. (2001). The art of innovation. New York: Currency/Doubleday.


· Maurya, A. (2012). Running lean. 1st ed. Sebastopol, CA: O'Reilly.


· Plattner, H., Meinel, C. and Weinberg, U. (2009). Design thinking. 1st ed. Mu?nchen: mi-Wirtschaftsbuch, FinanzBuch.


· Ries, E. (2011). The Lean Startup. 1st ed. Crown Business.


· Thoring, K. and Müller, R. (2011). Understanding the Creative Mechanisms of Design Thinking?: An Evolutionary Approach. In: Procedings of the Second Conference on Creativity and Innovation in Design.


· Link utili:


Lean Startup http://theleanstartup.com


Pensare al design http://www.ideou.com/




 Related material:
4_idea_development_notes.docx
 Training Fiche PPT:
4_ideas_development.pptx

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