Friday Jun 8, 2012 by Dave Power - President, Power Strategy
Instagram created a better way for people to share photographs. Their innovation was worth $1B to Facebook (even without revenue). Why couldn’t Facebook develop their own photo sharing solution — for less than $1B. And why didn’t Kodak or Polaroid come up with this idea first?
Instagram is more about user experience than technology. Its 13-person team created a new way to enhance and share photographs by understanding users, testing new features, and implementing continuous improvements … until their user community exploded. Instagram is a classic example of design thinking – the missing ingredient in most innovation processes.
Managers are trained as decision thinkers. When faced with a problem they define objectives, review options, analyze data and calculate ROI in order to make the best decision. Design thinkers take a different approach; they believe that if you uncover the right option, the decision will become obvious. Design thinkers ask questions such as:
“How do we know these are the best options?”
“What if anything were possible?”
To get the raw material they need to create new options, design thinkers spend time observing, talking to, and ‘standing in the shoes’ of customers. According to Suzanne Howard, Design Director at IDEO:
“Design thinkers gather information that helps us understand customer experiences. Once we understand their needs, desires, problems and aspirations—we can identify relevant business opportunities … As we prototype, we learn from people by observing, gathering feedback, and refining our approach. This iterative cycle of learning—trying out new business possibilities, gathering feedback and refining the ideas—is what makes design thinking unique.” American Express OPEN Forum
Design thinkers offer new tools for business strategists, such as the customer experience map – for discovering new market opportunities – and the business model canvas – for finding new ways to make money. These tools enable cross-functional teams to generate a broader array of outside-the-box options for new products, services and business models.
The most valuable tool in the discovery phase is the customer experience map, also know as a customer journey map or customer empathy map. The experience map below examines what customers are doing, thinking, feeling and experiencing during every stage of the shopping, purchasing and consumption process – in order to make Rail Europe a better customer experience (click on this map to open a high resolution PDF).
To design better business models, many design thinkers start with the Business Model Canvas developed by Alexander Osterwalder.
The best practice of growth companies is to incorporate these tools into a four-step innovation process:
1. Observe customers to uncover new problems (customer mapping)
2. Create new solutions (ideation, business model canvas)
3. Prototype and learn in the market (lean development)
4. Implement the best ideas (get to market and keep learning)
However, what most businesses gloss over is the first step: observing customers to uncover new problems or pain points. I’m amazed at the number of companies with great customer franchises who never talk to their customers outside of sales situations.
Unfortunately the design thinking of visionary founders like Edwin Land can get lost as their companies mature, leaving the door open to innovators such Instagram:
In the early days of Polaroid, Mr. Land said photography should “go beyond amusement and record-making to become a continuous partner of most human beings.” His goal was to build a business that would allow any one to feel an emotional connection to photography.
Dave Power is the President of Power Strategy in Cambridge. He was previously a Partner with Fidelity Ventures and Charles River Ventures. You can find this post, as well as additional content on his blog called Barriers to Growth. You can also follow Dave (@techpower) on Twitter by clicking here.