Innovation success: how to combine design thinking, business model canvas and lean startup

Launched in 2012, YourStory's Book Review section features over 340 titles on creativity, innovation, entrepreneurship, and digital transformation. See also our related columns The Turning Point, Techie Tuesdays, and Storybites.

A practical guide to design thinking and its broader contributions is well-provided in Innovator's Playbook: How to Create Great Products, Services and Experiences that Your Customers Will Love, by Nathan Baird.

Here are my key takeaways from this compelling 200-page book, summarised as well in the table below. See also my reviews of the related books Experiencing Design, Design Thinking Playbook, Design Your Thinking, Creative Confidence, Customer-Driven Transformation, Deliver Great Products that Customers Love, Creative Thinking Handbook, and Innovator’s DNA.

Based in Sydney, Nathan Baird is Founder of innovation consultancy Methodry. He has over 20 years of experience in customer-centric innovation, and was earlier at KPMG. He was also a consulting programme director for UTS in design innovation and creative intelligence.

Check out YourStory’s d.Zen (‘Design Zen’) section for more articles, interviews, book reviews, and conference coverage on design thinking, and our ‘8 Is’ Framework for Design Thinking.

Foundations

Nathan builds on Doblin’s framework of Ten Types of Innovation (see my book review here). It classifies innovation into ten types, based on three clusters: configuration (network, process, structure, profit mode), offering (product performance, product system), and experience (service, customer engagement, channel, brand).

Innovation challenges the status quo, creates new value, and satisfies human needs. Unfortunately, many innovations fail due to a lack of quality in the way real market needs are identified, Nathan cautions.

The innovation process should have a strong market orientation, with the voice of the customer built-in, according to Robert Cooper (Winning at New Products). The product should be clearly differentiated, and leverage the company’s competencies.

Many FMCG companies have been doing customer-centric research and development long before the field of design thinking became formalised and spread to other industries.

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Prof Sam Bucolo draws on the Danish Design Ladder and identifies several stages in design maturity: design as styling, innovation process, business strategy, organisational transformation, and even national competitive strategy.

“Design Thinking and Business Model Thinking are predominantly frontends of innovation methods. Agile and Lean Manufacturing are predominantly back-end methods, with Lean Startup being the glue between front and back,” Nathan explains.

“Jumping to the solution results in more defects, more rework and more costly failures overall,” he cautions. Customer need identification and concept testing are key in this regard.

Time pressure and human nature can lead to haste, but passion needs to be coupled with a rigorous framework and systematic developing, Nathan advises.

Preparation

“Too often in organisations we work in our siloed departments, doing handovers from one team to the next,” Nathan laments. It is better to have a team (six-10 people) throughout the innovation journey with roles such as project leader, project manager, facilitator, visualiser, and business specialists.

The team should have purpose, imagination, trust, respect, and resolve differences constructively. There should be eventual alignment in how they feel, think and act, through the four stages of forming, storming, norming, and performing (a framework developed by Bruce Tuckman).

The project brief should specify terms of success, scope, customer, research, constraints, stakeholders, timing, and budget. The innovation opportunity should be described in ways that are not too specific, but spur interest in finding a solution. Zooming in leads to the solution, zooming out or up leads to the broader purpose.

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Nathan suggests examples (How might we?) like addressing the financial needs of SMBs, improving long-haul flight experience, serving healthy food to busy families, addressing the fitness needs of youth, getting more women to ride bicycles, getting more citizens to vote, and improving HR onboarding.

For example, How might we make your jobs easier? got more answers at Toyota than How to increase productivity?

In terms of creative space, Nathan advises having movable furniture and lots of wall space to post, view and assess ideas.

Discovery

Speaking directly to customers in the field to understand their needs, pain points and delights leads to better real-world insights and potential success. It also motivates teams and gives them meaning.

Effective customer researchers show curiosity, empathy, objectivity, rapport, and respect, Nathan affirms. The knowledge review should cover existing research and identify knowledge gaps.

It is important to talk to the mainstream as well as extreme customers, as seen in the design of the Zyliss pizza cutter. Spend a day in the customer’s life, Nathan advises; this can even involve home visits.

Talking to people around the customers also helps (eg. Brylcreem talking to the male target audience’s girlfriends). Required roles are interviewer, note-taker and observer–but the customer should not be intimidated by all this, Nathan cautions.

School immersion by a food company yielded the important insight that children during school recess want to eat quickly because they want to play with their friends for the rest of the time. Snacks that can be eaten with one hand could be a good solution.

Distil insights

Nathan defines insight as a revelation (a-ha!) about underlying customer needs. “Insight is our inspiration for innovation, a penetrating truth that unlocks opportunity and inspires action,” in the words of Steven Melford.

An observation (breakfast is being skipped) can yield an insight (there is no time), and thus an idea for a solution (breakfast drink, portable breakfast).

Team members should share stories of their observations and findings, and build the empathy map by inferring customer thoughts and feelings. The Customer Profile Map conveys tasks, pains, and gains/benefits, which can be ranked (eg. important, nice to have, insignificant).

Jeanne Liedtka and Tim Ogilvie, co-authors of Designing for Growth, have listed several needs of customers. They include universal needs (eg. acceptance, belonging, love, security), autonomy (choice, space, freedom), and meaning (contribution, growth, purpose).

Examples include BBC’s Top Gear programme realising that audiences wanted not just tech features of cars, but also banter, humour and camaraderie.

Insights can be framed into opportunity statements which connect needs to causes (with words such as because and so that). Insights should be tested to see if they are compelling, actionable, recurring, and evoke passion.

Ideate

Care should be taken to get into an incubative state that lets effective ideas emerge, eg. during semi-automatic activities like walking, running, having a shower, or preparing to cook.

The ‘white noise’ of a café can also help. A ‘creative safari’ can include visits to other related practitioners.

For example, a Sainsbury team study on freshness included a visit to fishmongers. Some of them bought only from day boats, which led to ideas like baking bread daily only from fresh local ingredients.

Nathan suggests that the creative brief include headline, context, customer insight, and solution directions (eg. how might we make snacks that can be eaten on the run?).

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Emotional and mental creativity blockers should be removed by suspending quick judgment on others’ ideas, removing distractions, lateral thinking, and boosting creative confidence.

“Signal that failure is okay,” Nathan advises; there will be some inherent messiness in ideation. Music and food can be creativity enablers as well.

A trained facilitator must now lead an idea generation workshop to build on the creative briefs. Mind maps, idea sprints, and a gallery of ideas are suggested approaches here. Concepts and best practices from other fields can also be adopted, eg. the roll-on deodorant drew inspiration from the ballpoint pen.

Attributes, benefits and contributions to strategy, desirability, viability, and feasibility can be voted on and ranked, eg. using coloured sticky dots. The value proposition can be one of the offered benefits, or a combination of them (eg. on-demand ride of your choice at your convenience).

Nathan suggests the idea canvas as an effective tool here, with six components: customer insight, solution idea, benefits, value proposition, differentiator, and risky assumptions.

Experiment

The idea canvas is now used to launch a series of prototypes (“brainstorming with your hands,” in the words of David Kelley).

These could include concept boards, storyboards, roleplay, and physical prototypes. “Be sure to move quickly between prototypes to avoid getting too emotionally attached to it,” Nathan cautions.

For example, James Dyson developed a series of prototypes to solve problems like emptying messy vacuum cleaner bags, and loss of suction power as the bags filled. The Nespresso customer is a coffee aficionado who may not always want to go out for a good coffee experience but wants something better than instant coffee.

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Prototypes should be tested across at least three focus groups per customer category. Nathan suggests roping in field recruiters at this stage to bring in a diverse target base.

Once desirability has been established, the next phases are to determine feasibility and viability using the Business Model Canvas. Feasibility relates to resources, activities and partners, while viability relates to cost structure and revenue streams.

Nathan suggests modifying the original canvas in the following two fields: customer (adding needs and insights) and value proposition (expanding it using the idea canvas). Experiments should be designed so that prototypes can address the risky assumptions.

Nathan describes a two-dimensional risk matrix of uncertainty versus importance to map out the degree of risk, eg assumptions that private car owners will offer rides to strangers. Testing should be specified in experiment briefs, with a hypothesis, success criteria, and action (eg. 5 percent of test customers agree to share rides, and will pay).

Solution features should be developed and tested using the Lean Startup framework of Eric Ries (see my book review here). These experiments can involve landing pages, demos, videos, MVPs, wireframes, and prototypes.

Such approaches were used by Buffer app (landing page), DropBox (video), Food on the Table (concierge MVP), and Zappos (Wizard of Oz MVP).

Metrics to keep in mind are TAM (total available market), SAM (segmented available market), and SOM (share of the market). Business estimates should be drawn for up to three years to determine breakeven point.

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Findings from the experiments should be captured in a test learning board, which connects learnings to decisions (eg. there is supply, proceed to the next assumption).

Weekly snapshots of the evolving canvas should be captured to assess progress. “It’s also possible through your journey that you may have uncovered other opportunities that look for further exploration in future projects,” Nathan observes.

The next steps in the journey include full product development, launch, and branding. In the long run, such practices and cultures should be sustained. Design sprints are useful for incremental optimisation, while evolutionary and revolutionary innovation take longer.

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The road ahead

Each chapter in the book ends with provocative questions for innovators and leaders, and it would be apt to end this book review with some of these questions.

Does everyone in your organisation regularly spend time with customers, observing and interviewing them? Does the leader role model the importance of customer insights? Is there an opportunity for reflection and getting fresh inspiration?

Is there space in your organisation for people to conduct the messy, tactile and visual front end of innovation? Do your innovation teams have access to prototyping tools?

“Mastery involves experimenting with new methods and leading others in their adoption and proficiency to run it,” Nathan signs off.

YourStory has also published the pocketbook ‘Proverbs and Quotes for Entrepreneurs: A World of Inspiration for Startups’ as a creative and motivational guide for innovators (downloadable as apps here: Apple, Android).

(The story was updated to add an image.)