Lean start-up and design thinking are two concepts that are helping organisations to do business in innovative ways whilst still adhering to some of the more critical aspects of business planning and management (Ries 2011; Stokes & Wilson 2006). The premise that having a great idea, writing a business plan, and finding investors is the path to success is no longer the case as “new research by Harvard Business School’s Shikhar Ghosh shows 75% of all start-ups fail” (Blank 2013: 1). This essay provides a number of examples that illustrate how these two concepts are helping today’s organisations that are faced with more competition, external pressures, and constantly changing demands and needs from their audiences. Finally, these concepts are applied to personal experiences as a creative/entrepreneur in terms of the impact lean start-up and design thinking can have on business development.
The concept of lean start-up consists of a series of principles designed to help entrepreneurs take those great ideas and good timing and turn them into a viable, sustainable business (Ries 2011). Five principles that offer advice on business innovation include looking at entrepreneurship as management of uncertainty and change, validated learning that comes through the process of actually running the organisation and managing this uncertainty, a build-measure-learn process that involves learning from the customer and how they react to what is built, and innovation accounting that continually measures and assesses progresses and helps to set new milestones (Ries 2011). The principles have their origins in the concept of lean manufacturing processes that were started at Toyota decades ago and that still focus on removing any waste or inefficiency from the operating environment but that have been adapted for the entrepreneurial environment (Ries 2011). In order to identify any inefficiencies even in an organisation in its infancy, there must be ongoing measurement and learning processes applied to each aspect of the organisation (Ries 2011; Martin 2007).
There are a number of new organisations that have found success by applying this lean start-up concept. The first example is an ecommerce start-up company located in India called Urban Ladder that began applying the Lean Start-up principles (Rammohan 2013). They began with a landing page to learn what customers need in terms of types of furniture, how they felt about buying furniture online, and what they were unsure about in buying furniture online (Rammohan 2013). This, along with a more involved survey, was done so they could apply the validated learning principle and determine how best they could serve their potential customer base (Rammohan 2013; Ries 2011). This enabled them to only focus on those furniture categories that were most in demand from their prospective customer base, allowing them to keep the organisation lean rather than trying to offer every type of furniture category possible, which would be costly and inefficient (Rammohan 2013). The furniture company went as far as to very specifically define their customer segment as families in urban cities that are digitally savvy, have just recently bought a house and make one lakh per month (Rammohan 2013). In this way, it was understood that lean start-ups are about focusing on first finding the right audience and supplying them with what they want, so they realised that social media platforms could help them reach this target audience as well as gather new knowledge. This allowed them to expand their knowledge and validated the learning principle while also allowing them to measure their results through targeted ad campaigns that offered a significant number of analytics (Rammohan 2013; Ries 2011).
There were many examples of where this company tested various strategies to help them understand what worked and what did not. Since they were focused on great service, their lean-in principle of measuring results and studying their customer base revealed that customers were unhappy with the third-party delivery service they started using to expand into new cities (Rammohan 2013). Despite losing 30 per cent of their revenue by getting rid of this service, their customer satisfaction increased and they ended up with a growth in repeat traffic of 30 per cent (Rammohan 2013). This included testing out temporary offline shops, pricing, and ad campaigns each of which taught them more about their audience and provided a way to refine their strategies to maintain a sustainable business while trying new innovative practices before fully implementing them (Rammohan 2013).
Another example of a lean start-up is Dropbox, a cloud storage company that applied the principles to grow its customer base from 100,000 users to four million users in just 18 months (Kennett 2011). Because of a tough competitive environment, the leaders knew they could not wait to launch their product until it was perfect because they did not know when that would happen and by then it may not have been relevant to the market need (Kennett 2011). However, in applying the lean start-up principles, they took what they had to market in the form of a video demo to get comments from their audience and advice from them on how the product could improve, which helped them to understand their customer base and get attention and engagement from this audience (Kennett 2011). This assistance from their own potential customers provided a way to innovate and speed the product development process to the point where it could earn them revenue since it had been transformed into a product that customers really wanted (Kennett 2011). This illustrates the principles of validated learning and it also shows the value of getting help with innovation from the very people that will be using the product, creating a more efficient product development process (Ries 2011). Additionally, the company also turned to social media and viral marketing to create a low-cost, highly effective marketing campaign that also delivered measurable market and customer intelligence (Ries 2011).
The next concept is design thinking, which involves getting emotionally involved in what a specific problem creates for a consumer or business, using creativity to solve it, and applying rational business principles to ensure the solution is developed and brought to market in a timely and efficient manner (Brown 2009; Fraser 2012). Design thinking has a specific process that businesses can follow in order to solve a problem that also can be applied to the organisation’s overall development and implementation of its strategy (Plattner et al. 2010; Martin 2009). This includes defining the problem, researching it, creating ideas for solving it, developing a prototype, choosing the best solution, implementing it and learning from the entire process to determine if it worked or did not and why so that the entire process can be revisited (Plattner et al. 2010; Martin 2009; Visocky & O’Grady 2009). Because of the creative nature found in the design process, there is more flexibility that allows for innovative solutions whilst still retaining the formalised business framework that can assess, measure, and set boundaries and timelines (Brown 2009; Fraser 2012; Martin 2007).
A prime example of design thinking in action is the American inventor, Thomas Edison, who designed products like the light bulb that illustrated how the product is often just a vehicle for something much bigger that was being explored by the designer (Brown 2008). As one article noted in explaining how Edison was a prime example of design thinking, was that “he was able to envision how people would want to use what he made, and he engineered toward that insight” (Brown 2008: 1). Edison’s thought processes are an early example of how design thinking can be utilised for developing innovative products that respond directly to consumer needs rather than making existing products look better (Brown 2008).
A more recent example of using design thinking was that of IBM who used design thinking to deepen its customer engagement by rethinking the trade show experience in its presentation at thousands of shows around the world each year to differentiate itself and get closer to IBM’s customer base (Liedtka et al. 2013). The organisation undertook a significant research project on human interaction that it then translated into design criteria that the design team at IBM used to create a collaborative trade show experience between the company and its customers (Liedtka et al. 2013). Other companies have also faced the threat of commoditisation, including P&G, who turned to design thinking to create new products that were customer-centric and included working outside of the organisation in order to find the types of design ideas that could position the company as separate from the rest of the consumer product marketplace (Chiranjeevi 2009). P&G relied on its leadership to push the innovation design concept through all layers of the organisation in order to get everyone in the company, including those beyond product development, to look at a bigger picture and one that satisfied the customers’ needs (Chiranjeevi 2009). These two examples illustrate that even larger organisations can take an entrepreneurial approach to business strategy.
Conclusion – Self-reflection
In looking at these examples and how it has impacted me as a creative entrepreneur, it was important to consider how to incorporate the idea of design thinking into my own business development because it allowed me the freedom to be creative whilst still having a formal framework to work from in terms of the traditional components of business. However, I took more time on research and studying the target audience, learning about what they want, what they are interested in, and what they need from a product or service. From the teamwork we had in this year, since all of our team members come from Asian Countries, which are Korea and Taiwan. The advantage is our cultural backgrounds are more similar to each other, which made the working process more efficiently. On the other hand, sometimes it is lack of diversity when it comes to discussions or brainstorming. Fortunately, we all came from different professional backgrounds; each member has tried our best in order to find the niche to fill in during the procedure of design a business: from identifying problems, finding solutions, design, to manufacture, advertising and marketing events. The most we have learned from it is “how to communicate with people”, not only to the customer, but more importantly, is to communicate well within a team, and try to be more understanding to each other. I also focused more on being observant and using the customer insight in developing our business around customer needs learned about directly from our customers. It was a new experience to ask them directly for their ideas on what they want from a product, which made the entire process more creative rather than just focusing on what the competition was doing. At the same time, the lean start-up principles furthered my focus on learning and measuring all aspects of the business, which can be facilitated today with so many online analytical tools. Both concepts, including their principles and processes, have helped me look beyond just following a business plan and look more toward customers and potential customers for ideas, brainstorming sessions and feedback and analysis, which has helped me think differently about what I am creating and operating. This makes it easier to see change coming and embrace it as a way to keep developing better solutions that excite customers because it is exactly what they are looking for from a company.
Future– Blue print– Fashion
We are now live in a capitalistic /digitized society, when everything is accessible and nothing is really “new”, silhouette and the fabric becomes the most important part of the apparel. Furthermore, the more virtual the world is, the more demand for the process behind the products. Therefore, I hope to use the design thinking and lean start-up that I’ve learned this year, creating a fashion business that based on the sustainable/transparent process, and manipulate the form of silhouette/fabric, combined the off-line/ online store to share different functions together in order to generate a new experience for the audience.
At the end, many thanks to everyone who appeared in my life this year; we had a wonderful one.
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