The Design Thinking Playbook

by Michael Lewrick

  Look at the problem holistically; assume that it is complex per se.

  Even a complex, multidimensional, nonlinear, dynamic problem can be mapped and modeled as a system in a simplified way.

  Start with the simple stuff and go from rough to detail.

  Begin with the search for a solution once you have understood the problem (or aspects thereof).

  Always think in variants when searching for a solution.

  A graphical system representation helps to understand the problem and communicate the solution.

  Consider your first system picture to be a prototype that will be continuously tested and improved.

  Use a wide range of concepts, methods, and tools.

  Take different views and perspectives. Only one view is surely the wrong one.

  Combine systems thinking and design thinking into a common mindset.

  3.2 How to apply lean business model thinking

  In a dynamic environment, there is little time to plan activities over a long period. The lean start-up mindset is therefore the best for the continuation of design thinking activities. Like design thinking, it focuses on short iteration cycles and the consideration of customer feedback. At the end, the product life cycle and the development of the business model should be designed in such a way that few costs are incurred.

  We have had good experience with the lean canvas by A. Maurya (see part A on next page), which can be expanded very well by other design thinking methods, such as customer profile (see part B) and the experiment reports (see part C) by A. Osterwalder.

  The canvas is like the blueprint of an architect. It outlines the key factors, which ultimately cover the most important areas of a company: problem, solution, customers, value propositions, and financial viability.

  For the start-ups of Lilly and Marc, it is crucial to define a unique selling point. Lilly is faced with the challenge of having to define what exactly differentiates her start-up from the countless other consultancy firms on the market. Marc must find features that convince patients to manage their “patient record” on his solution. Furthermore, the value proposition is designed to provide a solid basis in the long run for monetizing the collected data.

  Thus the unique selling proposition (USP) constitutes the core of the canvas that either solves a specific problem of the customer (e.g., sovereignty over patient data) or meets a specific need (e.g., design thinking consultancy adapted to Asian business practices).

  On the right side of the canvas, the sales channels and revenue are entered alongside the customer segments (divided into target segment and early adapters).

  The left side of the canvas concentrates on rational reasons. The focus is on the problem statement, your own solution, and the existing alternatives, as well as on the cost structure. Supplements to the customer profile help us to understand the needs of the customer better. The reports of the experiments document our approach and show the progress per iteration.

   HOW MIGHT WE...

  develop the lean canvas step by step?

   EXPERT TIP

  Entry points in the canvas for digital offers

  As described, the classic entry point into the lean canvas in an innovation project is via the problem (or oftentimes the solution); then the value proposition is inferred via the customers (by means of the customer profile) (version A).

  With digital business models in particular, the entry can be made via other areas as well:

  B) via the solution

  We look for physical objects that have not yet been digitized and create the same customer application digitally instead of with a physical object.

  Example: iPod/CD -> streaming services or 3D printers for food

  C) via missing existing alternatives

  At present, almost everything is being digitized. It is safe to assume that many things can be digitized. We look for things for which there is no digital alternative yet.

  Example: Fiat money -> cryptocurrencies

  D) via the creation of an unfair advantage

  An unfair advantage as a protection against one’s own business model being copied can also be an entry point, such as by building up an entire business ecosystem.

  Example: WeChat (see Chapter 3.3)

  E) via digital instead of physical channels

  Companies such as Amazon continue to expand their channel access with ever new services. Digital access, directly or through a partner, can be the entry point.

  Example: Amazon services

  F) via existing business models

  Existing business models that have not yet been implemented in one’s own environment or language area. Existing solutions are copied and adapted to the new digital context.

  Example: Online retailers for eyeglasses

   EXPERT TIP

  Servitization and other business models

  Often, the business model becomes the differentiating factor per se. New business models may aim at securing income in the long term, heightening customer loyalty, or reducing production costs. One trend that has prevailed is servitization. The term means that customer needs are fulfilled without the customer having to own the physical product.

  One of the best-known examples is Rolls-Royce’s power-by-the-hour model in the area of aircraft engines. The pay-per-use model in the software industry as well as business models in the textile industry are also popular. Socks or baby clothing can now be ordered with a monthly subscription. Vigga has developed a model that enables mothers to lease organic baby clothing.

  To stay with the textile industry: For another business model, the issue of recycling is the decisive differentiating element. The basic idea is to generate value from a waste product. Flippa K takes back the worn clothing of their customers, for instance, and sells it in their own secondhand shops.

  The efficient use of resources can be an important part of the business model. Companies like YR are typical of this idea. It makes it possible for customers to create their own personal T-shirts, which are then produced on demand. This way, there won’t be any overproduction of designs, which are later hard to sell on the market. Consumers also have a greater emotional bond to the product and the brand.

  Circular value creation

  Servitization

  Frugality

  Create value from waste – close the cycle

  Create value for customers without having them to own the product (physical good)

  Promote the effective use of resources

  Recycling and resource efficiency are in the focus

  All-inclusive carefree packages, pay-per-use models, etc.

  Solutions that actively lower consumption and production

  Flippa K operates secondhand shops

  Rolls-Royce: power by the hour

  YR: On-demand production of T-shirts and shoes

  Closed loop

  Renting & leasing

  Co-creation

   EXPERT TIP

  Develop value proposition

  The need/approach/benefits/competition (NABC) analysis is another simple tool for drawing up a value proposition. If you are able to answer the key questions from the four areas adequately, the value proposition is usually clear.

  Unlike the customer profile, the NABC analysis takes the competition in due consideration, so it allows for an additional focus on uniqueness.

  The needs and benefits are derived from the customer profile. The approach corresponds to the solution, and the competition is in line with the existing alternatives in the lean canvas. The value proposition is derived from these elements.

  What customers do we address? (internal/external)

  What is the main customer need?

  What does the customer have problems with?

  Where are opportunities for improvement?

  Where does our opportunity lie?

  What are the main problems?

  What is the approach to a solution or the performance promise?

  What is the product,
service, or process proposal?

  How will the product or service be developed and launched on the market?

  How will we earn money with it? (business model)

  What technological drivers affect our business model?

  What are the benefits for the customer?

  What are qualitative and quantitative benefits for the customer?

  How can I communicate them in the form of storytelling?

  What alternatives exist today and in the future?

  What is the risk?

  How were the problems solved up to now?

  What makes up a good value proposition?

  From our experience, there are 10 key factors of success, which we should absolutely check during the validation of the value proposition:

  Embedding in a great business model.

  Focus on what is important for most customers.

  Focus on topics for which the customer is willing to spend a lot of money.

  Focus on unresolved problems.

  Aims at only a few tasks, pains, and gains but solves them extremely well.

  Alongside the functional task fulfillment, it takes into account the emotional and social components of the tasks.

  Alignment to the customer’s measurement of success.

  Differentiation from the competition.

  Better than the competition in at least one dimension.

  Difficult to copy.

  How do we communicate a value proposition?

  The value proposition we communicate should be formulated as concisely as possible in one brief sentence. This helps in communication and makes the business idea clearer by way of an analogy, such as “Sailcom” (car sharing for boats) or “WatchAdvisor” (TripAdvisor for watches). This analogy is described in the lean canvas as the “short concept.”

  Lilly still has trouble formulating her concept in one sentence. She tries out “Book and Fly for Design Thinking” or “Last Minute Problem Solving.” But she is not really happy with her ideas.

   EXPERT TIP

  With service design thinking to value excellence

  When we have already made our company fit for the future through operational and service excellence, service design thinking provides the necessary framework to initiate differentiation. As noted, business models with a strong focus on servitization may come into being, or customers may be segmented by categories that follow a different rationale than age, income, and family status. Service design also includes experience design, UX, and UI. Ultimately, the basic considerations are based on design and systems thinking.

  The insurance industry provides us with an example of the application of service design. The Swiss health insurer Sanitas integrates the Swissmom portal in their service portfolio. Thus a customer interaction chain is created with expectant mothers, from the initial wish for a child, to pregnancy, to giving birth, up to dealing with toddlers. The actual product of insurance protection for newborns is embedded in the service components. In addition, mothers are given access to a community and a further range of offers for childcare.

  The quality and operational excellence in the service used to be in the foreground. Then, more and more importance was put on experience. Today and in the future, value will take center stage. Value excellence is achieved through a strong customer centricity and close, proactive collaboration with customers.

  So-called customer experience chains constitute the basic structure; the touch points with the customer from the initial interaction to the warranty case are mapped in the chain.

  From our experience, we can recommend two tools:

  The customer journey (customer experience chain)

  Service blueprint (an extension of the customer experience chain as a blueprint)

  The customer experience chain, or customer journey, represents the process that the customer experiences in contact and dealing with our company. The issue is to design the journey of the customer through our offers. All contact points (touch points) should be considered.

  The service blueprint is an extension of the customer experience chain and also constitutes the provision of the service. On page 234, we will address the topic of using a service blueprint.

   HOW MIGHT WE...

  use a service blueprint?

  A service blueprint can be used to describe, for instance, a service prototype in a uniform, systematic, and structured way.

  A service blueprint is a method for visualizing and structuring service processes. Various levels are differentiated:

  Activities the customer goes through

  Visible activities of the provider with respect to the customer

  Invisible activities of the provider that are directly connected but are not visible to the customer

  Supporting activities and systems of the provider or his partners

  The customer interaction line separates customer activities from provider activities.

  The method is easy to understand, easy to apply, and puts the customer in the center. The blueprint can be iteratively improved and adapted. The iterations also help identify the weak points in the process.

  From our experience, teams can easily create a service blueprint using Post-its. We can go through the following steps:

  1. Actions and activities of the customer on the timeline (large and small circles for the respective activity)

  - What are the main actions?

  - What happens in this step?

  2. Customer interactions (green Post-its)

  - What are the touch points with the customer?

  3. Visible activities of the provider (blue Post-its)

  - Who are the actors?

  - Who is involved all together?

  - What are the actions of the provider?

  4. Invisible activities (light blue Post-its)

  - What are the activities that are invisible to the customer?

  5. Supporting activities and systems (orange Post-its)

  - What supports the whole thing (software, platform, processes)?

  6. Evaluation (red Post-its):

  - What is critical? Where are errors possible?

  - Where are risks and vulnerabilities?

  Afterward, we can infer ideas for improvements, new processes, or entire service innovations. The service blueprint also helps us in interviews/tests with customers/users to capture the situation and obtain feedback.

   EXPERT TIP

  Build the bridge from a concept to a scaling solution

  Normally, our design thinking journey ends with the concept. We have already successfully demonstrated desirability, technical feasibility, and economic viability. But we are still a long way from scaling the solution. In the next phases, business design and product development are frequently done separately; from our experience, it is profitable to create the development paths for the customers, the business, and the product in close collaboration.

  The iterative service development, for example, can be done in close contact with the customer. With customer experience chains, service blueprints, mock-ups, test Web sites and apps,and so forth, it is easier than ever to perfect services iteratively and in ever faster cycles with the customer. Business design can also be done in close contact with the customer. The business model is tested, adapted, and refined. All the other components, from marketing up to the value proposition, can be tested and developed with lead users or potential customers. Good business design is characterized by the fact that an obvious market opportunity is identified and transformed into a scaling business.

  Furthermore, customers must be developed and won over during the development phase in order to increase the probability of a scaling business in the end. Steve Blank calls this approach customer development.

   HOW MIGHT WE...

  proceed in a structured way to achieve scaling?

  With design thinking, we achieve a customer/problem fit—that is, our understanding of the customer and the problem has the necessary depth. Using lean start-up,
we initially create a problem/solution fit; then we refine it into a product/market fit. Over the course of the process, we reduce the risk step by step through experiments; at the same time, we heighten the value of the project. From the simple prototype, we develop a minimum viable product (MVP), expand it with each iteration, and test it with the customer. To launch and execute successfully the design of business ecosystems becomes of paramount importance. An MVE helps to test the desired ecosystem scenario.

  Because the various approaches build on one another, we charted the development steps with their potential approaches again by way of example. The steps apply especially to innovators such as Marc, people who are still at the beginning of their journey and have identified the problem to be solved.

  It goes without saying that the different approaches, such as lean start-up, business design, and customer development, which all have a mindset similar to design thinking, can be combined with one another.

  Described next are the individual steps of the integral problem to growth and scale framework.

   EXPERT TIP

  Expansion to lean management

  As soon as we have reached an initial scaling, lean management helps us to keep the structures lean and make the most of our potential. It is therefore an important element to keep our innovations alive and a sort of fuel for the scaling.