Truly innovative small businesses and startups create a bold vision of a future that doesn't exist yet, solving problems that customers don't even know they have. But they don't pull that vision out of thin air -- many inventive companies use a strategy called design thinking.
"Design thinking is a problem-solving approach," says Jeanne Liedtka, a design and innovation expert at University of Virginia's Darden School of Business. "It's a set of tools that help you make decisions in the kinds of high uncertainty situations that entrepreneurs face."
While business schools typically emphasize market research and data, design thinking focuses on real world interaction and experimentation. Many entrepreneurs naturally use ideas from this approach, but it's typically taught at design schools as a process for creating new products.
Using a design-thinking approach, entrepreneurs become anthropologists, studying the customers they hope to serve and using that knowledge to get simple prototypes into their hands quickly. "The power of a design thinking approach is that you get deep insight into customer needs," Liedtka says.
Design thinking can also be a way to get off the ground when all you have is a vague idea. "The structure of design thinking really helps when you have no clue how to begin," Liedtka says. It helps you explore and guides you to find problems that need to be solved.
Liedtka breaks the design-thinking process into four stages, assigning a core question to each of them. Try asking yourself these questions as you create a new product or business:
1. What is the opportunity?
The first step in the design-thinking process is to understand the solutions that already exist for the problem you're trying to solve or the group you want to help. "Design thinking starts with identifying an area of opportunity, not a solution," Liedtka says.
To do that, observe real people in their natural environment. For example, if you want to create a better tablet, watch a small group of 10 to 12 people using their current tablets in daily life. What do they like? What annoys them? What workarounds do they use to overcome design flaws? Those answers will highlight problems your customers don't even know they have -- problems that you can solve.
2. What if?
In the second stage, start to imagine solutions. Take the list of needs you discovered in the field, then brainstorm as many ways to meet those needs as possible. Let yourself get creative here -- assume that anything is possible.
"The ideas you'll come out with aren’t blue sky made up ideas," Liedtka says. "They're inspired by needs you've identified." By limiting the brainstorm process in that way, you increase the chances of finding a viable solution and creating a successful product.
3. What wows?
Once you've exhausted all the possible solutions, think practically about which ones are most likely to work. "You're looking for the wow zone," Liedtka says. "That's the intersection of something that customers want, that you can create, and that's likely to have a profitable business model associated with it."
At this point, you're bringing more structure and data to the design process, essentially making a traditional business case for each of the options. With that lens, narrow your ideas down to a handful of viable options, some safe and some adventurous.
4. What works?
Finally, create prototypes for each of those options and bring them back to the customers you observed at the beginning. Each prototype should be extremely simple, allowing you to watch and hear their reactions with minimal investment.
After your observations, take the feedback and iterate, creating another round of simple prototypes to test. "Small experiments are the way you fail, or ideally succeed, fast and cheap," Liedtka says. By the time you bring the product to market, you'll have more confidence in its chances of success.