Yesterday, I was quite delighted to see my post Integrating Lean Startup and Design Thinking ranked #11 of the Top 100 Innovation Posts 2014 at Innovation Excellence. Once again, I was pondering why this post has been by far the most resonating one I’ve written up to now. My conclusion: many of us are aware that innovation tools, even up-to-date ones, have a limited scope and that they can benefit from being complemented with other approaches. However, we tend to build strong “advocate” communities, being inclined to praise “their tool” as the most powerful one. In fact, the real power lies in combining different innovation approaches to fit a unique context. “Either-or” was yesterday, today we need more integrative, “both-and” thinking. Steve Blank, the father of Lean Startup, comments on the Lean Startup vs. Design Thinking discussion here:
Often I hear spirited defenses for Customer Development versus Design Thinking or vice versa, and my reaction is to slowly back out of these faith-based conversations. For large companies, it isn’t about which process is right – the reality is that we probably haven’t invented the right process yet. It’s about whether your company is satisfied with the speed, quality and size of the innovations being produced. And whether you’re applying the right customer discovery process to the right situation. No one size fits all.
Blank admits that Lean Startup and Design Thinking share similar characteristics in exploring customer needs, but their origins, differences and speed in practice are very different in his opinion. He distinguishes the two approaches as follows:
I invented the Customer Development process trying to solve two startup problems. First, most Silicon Valley startups were (and primarily still are) technology-driven. They are founded and funded by visionaries who already have products (or product ideas based on technology innovation) and now need to find customers and markets. (Think of the early days of Intel, Apple, Cisco, Google, Facebook, Twitter, etc.) Second, burn rate and dwindling cash meant startups had to find these customers and the attendant product/market fit rapidly – before they ran out of money. These two characteristics– a technology-driven product already in hand and a need for speed – drove the unique characteristics of Customer Development.
Design Thinking also focuses on understanding the needs of potential customers outside the building. But its motivations and tactics are different from those of Customer Development. Design Thinking doesn’t start with a founder’s vision and a product in-hand. Instead it starts with “needs finding” and attempts to reduce new product risk by accelerating learning through rapid prototyping. This cycle of Inspiration, Ideation and Implementation is a solutions-based approach to solving customer problems. Design Thinking is perfectly suited to situations where the process isn’t engineering-driven; time and money are abundant and the cost (and time) of a failure of a major project launch can be substantial. This process makes sense in a large company when the bets on a new product require large investments in engineering, a new factory or spending 10s or 100s of millions on launching a new product line.
Basically, both models work for corporate innovation depending on the purpose. There is no “right” process for all innovation types. Actually, a perfect world wouldn’t need Customer Development as needs should be identified prior to solution development. But real world turns out to be different…
Nathan Furr and Jeff Dyer found in their recent research that managers who help their firms create and maintain an innovation premium use a different set of tools than their more traditional counterparts. They tend to apply tools that help deal with increasing uncertainty of innovation outcomes. Furr and Dyer have synthesized an integrated toolset based on the tools’ particular strengths and scopes, respectively (see chart below). Different, well-known and -proven approaches are targeted at the particular steps to be taken in the innovation process.
As innovation – in particular the front end – is messy, the process is not necessarily linear and often doesn’t start with the first step. Quite often, even in established companies, innovation activities start off with the development of “visionary” products or business models, rather than identified needs or problems. The key point is: all process steps have to be addressed upfront in order to scale up a new business successfully. This requires dedicated tools for each of the following steps:
Insight: vision, flashes of inspiration, clues there is a problem, surprises that are lurking in the world around us
Problem: customer empathy, deep understanding of the real problem or job-to-be-done worth solving
Solution: fastest path to the solution, iterative prototyping, validation of problem-solution fit
Business Model: experimentation to discover the right business model, validation of other components of the business model, such as go-to-market strategy, pricing and cost structure
As we can see from the chart, e.g. Design Thinking is primarily used in the Insight and Problem step, whereas Lean Startup is geared to the Solution and Business Model step. That’s similiar to the Lean Design Thinking process model, as outlined earlier.
Rather than advocating and defending one particular innovation approach or tool, we need to get stronger at integrative thinking. All tools unlock their potential best when used in combination and co-existence with other tools. Different innovation approaches don’t exclude, but complement each other. Therefore, we should nurture discussion and collaboration across “fan” communities to bring forward holistic and integrated innovation approaches that can be tailored to fit individual innovation contexts.
As for Lean Startup vs. Design Thinking we can make the following differentiation:
- Both approaches target at matching problems and suitable solutions, i.e. validating a problem-solution fit.
- Lean Startup mostly starts with an existing vision, technology or product. It primarily aims at speed and “good enough” decision making with limited time and resources.
- Design Thinking is based on properly understanding customer needs and iteratively prototyping to meet those needs with a satisfying solution. It primarily aims at doing the right things (i.e. serving a well-understood need properly) before investing time and resources.
Let’s bear in mind: One size doesn’t fit all innovation!