A good idea today may not be a good idea tomorrow
Over the last few decades, the cadence and speed with which new ideas hit the market has increased dramatically. The ever-shifting business landscape causes products and services to depreciate rapidly. Business models have to adapt continuously. The non-stop cycle of innovation and re-engineering results in a continuous tug-of-war between market leaders and challengers, competing over portions of the consumer market. That is, until a disruptor enters the game and dramatically upsets the already delicate balance.
What makes organizations adapt better to a shifting landscape of ideas and changing business models? Can we successfully adopt a mindset to increase an organization's potential for innovation and its resilience to disruption? What makes certain companies so successful at disrupting well-established businesses?
In the book, Hacking Growth, authors Sean Ellis and Morgan Brown argue the popular mythology about companies experiencing rapid growth – that they simply came up with a brilliant idea and took the market by storm – is false. Mass customer adoption is the result of methodical testing of new ideas and analysis of user behavior in order to find the one winning idea that drives growth. In my opinion, the key to getting to this idea is harnessing organizational complexity while enabling individual creativity.
Why we need to adopt a different approach
Throughout history, improvements in technology were achieved through repetition and experimentation. If artisans found the means to produce better quality products, they passed on their knowledge to their apprentices, who further improved the products over generations. Workplace specialization was low. One person had to learn how to build an entire product from raw materials to finish. This also meant artisans had a deep understanding of every part of the process and could experiment with new tools and techniques.
With the advent of industrial production (first adopted in Britain in the late 18th century), manufacturing goods relied on interdependent processes that made it possible to scale production to meet market needs. A change in one of these sub-processes would likely have a ripple effect on the entire manufacturing line, for better or worse. While an artisan was free to try out new tools and experiment with different materials, a factory worker in the early 20th century followed rigorous rules and strict production standards.
Because of the interdependent nature of the manufacturing process, scientific management methods were created to lower the cost and risk of innovation. Specialists created scalable and standardized workflows and templates based on empiricism, observation, and precise metrics in order to optimize production, minimize waste, and improve quality.
Today's service economies drive workplace specialization even further than before. Early scientific management techniques are replaced with more advanced methods, and we create respective roles and departments to ensure the success of our products and services: Product management, business, IT, marketing, customer service, quality assurance, and others.
Separating critical roles into departments, however, has created another problem: It relegates innovation to a team of dedicated experts who may or may not have the perspective to identify what differentiates successful products and services from failed ones. The product team may conduct the initial market research, while another team builds the product. Sales and marketing start working on positioning products once the concept is already finished and feed back information to the product team on what to improve. The entire cycle may take a quarter or more, making changes slow and expensive. Any delay in rolling out differentiating features may cost the company customers and revenue. This is especially true in a disruptive marketplace.
We need different tools and methods to eliminate the risks and costs of long development and release cycles. These tools must be based on empirical data and must allow for fast, iterative feedback cycles with the potential to test out risky and disruptive ideas without the fear of failure. In other words, we must know without a doubt whether a product or feature is worth investing in before we spend too much time and effort on building it.
What makes design thinking effective? Collaboration, empirical research, and validation
Design thinking is a human-centered process for driving innovation. Instead of following the traditional product development cycle, we shorten the process and get all roles on board before we even start development. We achieve this by promoting cross-functional collaboration, adopting a user-centric view, and by testing assumptions early and often.
Cross-departmental collaboration and leveraging individual creativity is a must-have for any successful product idea. While in a traditional top-down product development scenario experts would work on a product or service at different stages of its life cycle (e.g., concept, design, production), design thinking sessions require representatives from all essential fields to collaborate on the design early on.
This leads to a cross-pollination of ideas that would never emerge otherwise. We encourage participants to come up with bold solutions, even ones that seem unrealistic at first glance. Considering all options, including seemingly unfeasible ones, is the key to finding the ideas that can make a big difference. By leveraging individual creativity within an interdisciplinary team, we also remove the organizational barriers of innovation. Contributors feel empowered to rethink the way customers interact with products and services. At the same time, positioning the customer at the center of the innovation process gives the team a target that transcends departmental goals and allows the team to focus on the bottom line: Designing products and services customers find valuable and enjoy using.
Customer focus is not just a theoretical exercise. Sometimes great ideas fall short due to customers not recognizing the value or finding the product too convoluted to use. In the design thinking process, we use empirical data from observation and testing to validate our theories with end-users or customers at the early stages of product design. Sometimes it takes an iteration or two for the team to get everything right and start building. The iteration and testing phases can be done through rapid prototypes (mock screens representing the end-user experience) or by getting early versions of our product into customers' hands and gathering both qualitative and quantitative feedback (e.g., usage statistics, NPS score, surveys).
As Ellis and Brown state, the key to a breakthrough idea is continuous and methodical testing and iterating. The faster the innovation cycle becomes, the more we can influence growth, market share, customer satisfaction and retention. Failing early in the innovation process can be very beneficial as it doesn't cost significant time or money. It can lead to unexpected breakthroughs and ideas we would not risk trying in regular product delivery cycles. Design thinking dramatically reduces the risk of investing in a new product or service. Instead of looking at quarterly usage statistics, we define a product vision, a value proposition and the metrics we want to test for in a manner of days. Taking this vision in front of potential customers and getting feedback via usability testing helps the team evaluate what works and what has to change. It also highlights the potential for achieving the "aha moment" that is so important to driving adoption and growth. Users who love the experience of using a product will evangelize it to others free of charge.
Design thinking helps businesses innovate
Driving innovation in a shifting marketplace can be a daunting task. In addition to dealing with changing customer expectations, we have to align across specialized silos of co-workers and ensure that quality standards and operational excellence are met. Innovating, at the same time, is not optional; it is a necessity to maintain growth and market share in the face of disruption.
Innovating or thinking outside the current standards often means leaving standardized, top-down product delivery practices behind, investing in cross-functional collaboration, and fostering individual creativity. By tapping into the broader knowledge of organizations by aligning people with different perspectives behind a customer-centric goal, researching user needs, and testing for success metrics, design thinking can accelerate innovation, and reduce costs and risks without compromising on quality or efficiency.
While it only takes one standout feature to differentiate a product or service in the market, it takes time, effort, research and experimentation to find the right one. Design thinking is uniquely positioned to leverage organizational complexity, individual creativity, and quick cycles of iterations to drive growth and create products that users love to use.
- See how a Pega Catalyst session uses design thinking to jumpstart transformative projects.
- Learn how the combination of design thinking and low-code speed application development.
- Discover how Pega’s Microjourney Kickstart program delivers meaningful business outcomes in just five weeks.
- More from Andras: Read how failing fast helps build better solutions and the benefits of co-production.