An explorer can never know what he is exploring until it has been explored.

It is quote from George Bateson, and it captures well what I learned last months. One of the main questions for many companies developing products or services is: what will be new viable businesses in the future? This question puts forward two challenges. First: radical proposals for new business have to be invented. And although in hindsight it always seems ‘logical’, it isn’t when an idea is born. Quite contrary: radical ideas often seem to create opposition rather than support. E.g., nobody could foresee what the impact would be of a seemingly sleazy ‘hot or not’ site, named ‘thefacebook’ in 2004. Second, it takes a tremendous effort to develop products and services in full, considering time, money and resources. So, even when a promising idea is born, a decision has to be made whether or not to pursue it: what is the bottom line? Much effort is spent to understand latent needs and identify potential businesses. appletastingA plethora of (often standardized) methods is used, including trend analysis, interviews, surveys, testpanels and so on. However, for ideation, these methods are known to be a poor fit, and recently more qualitative methods were developed. These include doing observations in-the-wild (e.g., contextual inquiry) or having users participating in the design process (e.g., context mapping). The Design team I’m part of uses many of these methods to learn what clients and users need.

Provoking instead of observing
Still, in 2012 some of the designers felt edgy: despite the considerable efforts exciting ideas were seldom born – if ever. These methods are outstanding for probing into the world of existing clients using existing products and services. Great for understanding what works and what not, and proposing improvements. Yet, for generating ideas for new businesses these method seem not to be the right toolset. Most of all the involved designers felt that exploration and creativity were missing, just as visualizing, experimenting, discussing and so. They sensed that another approach was needed, a typical ‘design thinking’ approach that is about inspiring or even provoking. Inspired by books as Design Driven Innovation (Verganti), or Change by Design (Brown), we started a (CRISP) project, aiming to develop exciting new business proposals in a typical designerly way. The theoretical foundations were provided by the previous research on what designers contribute to teams and organizations (Stompff 2012). In time the core question developed into:

how can the organization know what the organization needs to develop, until the organization sees what might be possible?

An open-ended design brief
We started in September 2012 without a clear project brief or an established method. What they arranged was sufficient time, a ‘garage-like’ office space (no clean desk!), support to do experiments / built prototypes, and a traineeship at one of the clients. More important, we had a mission: to show that design thinking can initiate and generate new business. The first step was interviewing key stakeholders, such as business managers or directors of R&D. These interviews were open-ended and truly inspiring, revolving around the question: what do you believe we should do? These lead to four proposals that were presented. No: these were not accurately depicting what the stakeholders stated. Rather, it were designerly interpretations of what was learned in the interviews: concepts of what might be. At one hand these were just iconic sketches with a catchy soundbite as a title, leaving open much space for others to explore. At the same time these proposals were sufficiently to the point so that others could reflect on it.
Interestingly, precisely the iconic display of a concept led to inspiring discussions. Sometimes, just seeing the proposal already incited a discussion, even before we could explain it. Stakeholders started to explore the idea in ways we did not conceive before hand, learning well what was on their minds. The sketches had the charm of the skeleton, the phenomenon that a half-finished design incites imagination and has more persuasive power than the finished version. All agreed that one idea was particularly interesting, above all because it is about exploring new markets with existing technology. These people are used to decide on projects whereby investments are huge and planning concerns years. Suddenly they were confronted with an idea that seemed not hard to become concrete, leveraging what they had already. New business around the corner.

Prototyping the business
Yet, although there was an exciting concept, it needed much work to become a real opportunity. The designers realized that just designing great looking proposals (‘concept cars’) incorporate a fallacy when it comes to new business– the concept car fallacy. Great looking designs easily persuade others that it are great ideas, however in real life for a number of reasons the business concept possibly doesn’t take off. Because e.g. it is too expensive; the service is poor; the sales channels are a mismatch and so on. In product development, everybody knows that innovation incorporates (unforeseeable) risks, risks that are dealt with by validating the innovation in time.
If one develops a new concept for a product, one needs a prototype the product and test it with users. If one develops a new service concept, one needs to prototype it and test it with users. Right? So if one develops a new business concept, one needs to prototype it and test it, with users.

duct tapeFor that reason, the designers decided to ‘go all the way’: develop, prototype and test the business proposal. However, in product design first prototypes are often ‘duct tape’ models, giving sufficiently a feel of shape, size, and how it will be used. What is a duct tape model for new business? The designers decided that the entire customer journey needed to be part of their test. Put differently: they needed to develop a ‘brand’, the ‘service’, the actual ‘product’ that is bought, the ‘shop’ and ‘webshop’ and so on. And as with duct tape models: looking at the big picture rather than messy details. In order to do so, we needed to go way beyond our daily activities. We needed to ‘pre-engineer’ products, consider how it could be produced. Develop a brand, a retail concept and a webshop. And even a business model. More and more managers dropped at our ‘garage’ to see how things were going, providing valuable input to fill in the blank spots. Of course, some of them were somewhat irritated that ‘designers’ were engineering or developing business models, for which many experts exist inside the organization. But they understood that any test could only be with an integral prototype of the business concept – even if it is ‘duct tape’.
In time, we were capable to open a ‘shop’ and invited people –oblivious of what we were doing- to buy things. We did so only for a limited amount of products and even a more limited amount of time. Regardless, it was a success. We drew much attention, and things sold out quickly. More important, by means of direct interactions with customers we learned what works and what not, and even got a range of new suggestions. Of course: the bottom line was not positive: any product sold was basically an expensive prototype sold at the price of an engineered mass-product. Nobody cared: any prototype is costly, yet serves only to learn. And we learned, swiftly!

The project has not ended yet, and it is uncertain what will be its future. Still, several conclusions can be drawn. First of all, the typical iterative and holistic way of working of design thinking is also a viable option for generating business. Possibly many of you design thinkers will say: we knew that. Point is: our stakeholders needed to learn that! Second, we were amazed by the results of the ‘business prototype’. Many new insights arose, and admittingly some of our assumptions turned out wrong. A next step will look different already. For a relatively small amount of money and resources this was learned, instead of the hard way in actual business. Third, and possibly most important: it created a platform all stakeholders could look at, reflect and decide. They could invite others, including even their friends. They could discuss with us. Suddenly it was not a ‘good idea’, but a viable option.

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