Building Your Business
Building a business consists of aligning three building blogs; people, product or services and processes. However, traditionally, people, the most important part of the process have largely been ignored. The use of design in business especially in innovation has generated a lot of interest in recent years as both academics and practitioners began to seek for non-traditional ways of solving problems as challenges escalate and become more complex so that the traditional method is no longer appropriate.
The Design Thinking Approach
The organisation that has pioneered the use of design in business is IDEO, which has culminated in what is known as design thinking. According to Tim Brown, President and CEO of IDEO, “Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” In other words, design thinking means thinking like a designer and using the tools of design by people not trained as designers to transform the way businesses are organised, products are developed, services are provided, processes, and strategy are developed and executed or address various challenges. This approach combines what is desirable from a human point of view with what is technologically feasible and economically viable.
Another leading authority on the subject is Jeanne Liedtka, Professor of Business Administration at the Darden School of the University of Virginia. She has this this to say about the benefit of using design in business “The most secure source of new ideas that have true competitive advantage, and hence, higher margins, is customers’ unarticulated needs. Customer intimacy—a deep knowledge of customers and their problems—helps to uncover those needs.”
As it can be seen, the design thinking approach is similar to the Business Model Canvas in they are both human-centered and are suited to situations where there is not enough data to start with. The diagram below is the process used by Stanford University.
Source: The Design Thinking Process – Stanford University
The example that I have used to enable me understand assumption testing is to use the Business Model Canvas. When planning to start a business, traditionally, people are asked to gather data and develop a business plan, including the main financial statements. This can be done just sitting at your and estimating figures on the assumption that people are going to buy whatever you are going to sell to them. I believe the era of hard selling was based on this idea that people will buy if the salesman is conniving or persuasive enough.
The Business Model Canvas, on the other hand, leaves room for identifying and defining the assumptions of the new venture and testing those assumptions in the field by actually speaking to customers or people. Similar to the design thinking approach, it can be seen that the Business Model Canvas above is like a prototype used in the lesson. It specifically focuses on testing assumptions rather than gathering data and enabling a validated learning rather gathering data.
It is in this way that, the value creation test, the execution test, the scalability and the defensibility test of a new venture can truly be carried out. Like design thinking that is option focused, the business model approach is a way of searching a suitable business model and the iteration process allows this to happen as the canvas as appropriate.