Key take-aways from AICD Director Download: Lean / Design Thinking

Lead Change from the Top - Part 2

In my previous article I discussed the application of Lean / Design thinking, in Value Proposition Design and Business Model Design to businesses so that they can stop making the #1 mistake: creating products people don’t want.

Using these frameworks is a necessary first step, however at this stage the assumptions are usually all guesses. As part of the program, the development team is required to go out and test their assumptions and talk to customers to discover if they are on the right track. As well-informed as the team may be, there can be a lot of very important nuances in the answers customers give, which are absolutely necessary to this process. This information is often not captured or obvious in market research studies. Testing the market by interviewing prospective customers with your assumptions is important. 

Once assumptions have been tested in this way the team is able to start filling out the business model canvas, putting down assumptions about how the business model will work. But again, they are all guesses until they are tested for how that's actually going to work in practice. Again, all the details and nuances in the responses from customers as to whether and how they like to buy through a particular channel or whether there's a better fit for them in another channel comes to light. These are all important pieces of information that are necessary to gather from customers interviews. 

Here, the objective is to try to optimise the value proposition fit. We're trying to observe the customer. Using our original assumptions we observe and verify the things that we felt we understood about the customer. Or if we were wrong, then we learn from the information provided by the customer interviews, changing our value proposition canvas or our business model canvas. 

All this work on understanding the customer and observing the customer before we start to design and create the value in the product or service forms the basis of what and how we plan to offer. That's how we achieve value proposition fit, and it's really important to do this with a customer focus. 

The definition of ‘customer’ = all stakeholders: customers, regulators, insurers, all of the players out there that make up the ecosystem which is going to be buying or supporting the purchase of the product. It is important to gather as much information from all of these participants in the market as possible. That way, a new product or service when launched into the market can be de-risked and optimised for the greatest impact. 

So we're not talking about market research, where we are trying to observe a few things about many people. We're talking about insight research where we're trying to observe everything about a smaller number of people. In this process we're studying the desirability of a new product or service. We're not focused on ‘Can we do this?' We are focused on ‘Do they want this?'

We're not focused on ‘Can we do this?’ ... We are focused on ‘Do they want this?'

We do this by spending time running customer interviews; getting out of the building. As Steve Blank said in his book The Startup Owners Manual: 'Getting out of the building' and interviewing customers, observing them, understanding what they do, understanding what choices they make, why they make those choices, what are the key attributes they're looking for.

Again in this process we're also trying to understand and identify what we might call early adopters or innovators in the market. These will be the first customers to take up your product. They're the ones that are going to be propagating the information to other customers, acting as your reference source for the next tier of customer that comes on board. 

Beyond the interviewing, we go the next step, which is really around experimenting. A team can experiment by offering a seminar to customers, which is a sure way to find out if they're interested enough in the product. Would they actually come along to a seminar? Or offering them some more information about the proposed solution on a website and if they give their name and address they can have a PDF white-paper. These are some ways of experimenting with customers that require the customer to commit some time and effort, while also giving you an indication if they are interested beyond just being interviewed. If they're happy to actually give up some of their time, jump in the car, drive down the road, and sit in a seminar for a couple of hours, to listen to what's happening with this type of product, and to understand what your plans are! Interviews and experiments are both important mechanisms.

With experimentation, one of the things we're looking for is a deeper understanding of stakeholders and potential customers, a deeper understanding of: 

·       who feels the pain more acutely

·       who is trying to solve the problem

·       who will be more interested in the product

·       who might be the early adopter or innovators in the space, willing to take up the product early 

It's important to get customers’ support and endorsement. If you can get their support and endorsement, then you'll get the early revenues but you'll also get recommendations to the early majority to take up the product. And these are all important stepping-stones in de-risking the launch of a new product or service, and maximising the impact that that product or service can have.

When looking for early adopters, it's important to understand their hierarchy of needs. Early adopters have a problem, are aware of having a problem, are actively seeking a solution, have put a solution together or hacked a solution together, in order to get something done. And they either have a budget, or they're willing to get a budget, because they feel the problem acutely. So it's important to identify those early adopters. They will help to create the right language around your product or service, to articulate the kinds of messages that these early adopters would respond to. And a lot of this information comes out of the interviews that you conduct during design thinking.

This is what people / groups are doing to try and de-risk new product development, new product R&D, inform the design of projects, and to de-risk the launch and increase the impact of new products on the market.

In the final article of this series I will zero in on the role of boards and how directors should approach design thinking for their organisation.

Ian is a successful entrepreneur with global commercial experience across industries. He has taken various early stage science and technology projects and new business model projects and created successful businesses. Ian is an Entrepreneur-in-Residence at INSEAD and a leading facilitator of the CSIRO ON Accelerate program. Ian is also a professional non-executive director. In his private consultancy, Ian Brown Group, he specialises in entrepreneurship mentoring and coaching for individuals as well as delivering corporate entrepreneurship programs.