Common Problems Startups Face – A design thinking outlook

Common problems startups face – A Design thinking outlook

I have been directly associated with startups since 2006. That’s when I started my career as a member of a venture capital investment team. All the way to my recent years consulting them and young businesses, I have heard a multitude of problems that startups face. Problems that can largely be categorized under two main causes.

The first one of course, being investments.
The second, being the lack of traction, or growth in business.

With regard the problem of funds, you could further break it up in to funds you must have, and funds that are good to have.

Literally all of us are, more often than not, influenced by awe-inspiring startup stories. About those startups in the world that seem to be on a blistering growth path. With people and funds literally queuing up for an opportunity to invest in them.

Watched the movie ‘The Incredible Hulk’? The Hulk and the Abomination in that are like those few startups that receive disproportionately high amounts of funding.

Everyone is not like them. And even in their case, of the two, only Hulk was relatively stable with the superpower. The Abomination, as the name goes, became that way because of his lust for super-strength to beat the Hulk.

Similarly, even if all startups could be funded like that, or like Uber and PayTM and Zomato and others have been, there is no guarantee they will succeed. Because making a business stable takes managing a lot more variables than merely the investment one.

Which brings us back to the other alternative – funds you must have.

This is the basic minimum investment that you would need to get your startup rolling. It isn’t too tough to calculate it. Just make sure you have sufficient buffer. And keep checking those levels so you don’t realize it’s bad only once you’re broke. The advantage of this mindset, is that even if external investments never come, your startup will be built on a solid foundation and a sound business model. That, as opposed to one of hyper-experimenting, as is sometimes the case with super-funded startups. Take the case of TinyOwl hiring and almost immediately firing hundreds of enthusiastic freshers back in the day. Or Ola paying USD 31.7 million for FoodPanda a year and a half ago, only to fire a lot of the staff and suspend its operations recently.

While such news pieces might be good to hear, they are often not something to be proud of.

A bootstrapped startup will have its share of proud moments too. And they will be far more grounded and not the kind that could be easily taken away, unlike the case with some over-funded ventures.

Now let’s look at the other main problem area of startups. The lack of traction or growth.

In my book, Design the Future, I mention what is to me, a wonderful example from both an investment angle and a strategic one that depended solely on the understanding of customer needs.

One portfolio company whose growth my boss and I used to oversee, was in the car rental space. Around 2009, it was on its way to be the largest player in India, right on the heels of Meru. Meru was then leading the pack in terms of size of fleet.

However, what was interesting, was that Meru’s business had been built largely on debt. Ours had been built on equity. Which meant we were profitable sooner, and could scale much faster. Meru had just turned profitable around 2009-10, if I remember correctly.

And back then, our portfolio company was already onto the model of partnered fleet. That is what Uber is all about now. Our company was collaborating with small tourist vehicle operators to add their fleet and drivers to their own, in a revenue-sharing model.

Now think about this. A company founded in 2006, which was already employing a model that we in recent times popularly know of as Uber, what as of today, has a market capitalization of USD 69 Billion! And Uber was founded only in March of 2009 (conceptualized in 2008).

So what prevented our portfolio company from being the one valued at USD 69 billion?

In hindsight, a lack of better understanding of the stakeholders in the ecosystem, is my guess.

Our portfolio company and other players back then were perhaps used to a certain customer price level and profitability that they enjoyed in a tried-and-tested pan-India market.

However, perhaps we failed to see that we could considerably reduce the margins and incentivize the partner ecosystem, in an effort to gain massive scale.

And with customers, it is only in very select areas that if we offer something at a lower price, they won’t take it. But certainly not with transport.

So, Uber carpeted several countries with the initial attractive pricing, and more than encouraging partner revenue-sharing and incentives.

And companies like ours, that didn’t think huge enough, shrunk into insignificance in that particular space at least, which they had ruled for some years till then.

Putting investments and a better understanding of the stakeholder ecosystem together, it is not necessary that every business and every idea has to be Uber-sized!

You can as well remain small, exclusive and yet thriving in a small or select few areas or geographies, if that is your business vision. Or, as is the case with Uber, you can be the most recognized brand in ground transport.

What is most important, is to first decide where on that spectrum you want to be. Then you need to find out (not in meeting rooms, but by spending time with stakeholders), what their likes and dislikes are. What drives them, what their profit expectations are? And how flexible are they on pricing; or, is there a better way you can offer them what you do? Something that might completely be poles apart from how you offer it right now.

Scenarios in the startup ecosystem are limitless. And so are the possibilities.

Originally written for NODD app and posted here: link

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If you own, manage or work at a company, and are grappling with a complex challenge or are in need of innovation for growth, get in touch. More here.

And you might find my book, ‘Design the Future’ interesting. It demystifies the mindset of Design Thinking. Ebook’s on Amazon, and paperbacks at leading online bookstores including Amazon & Flipkart.

Theranos – Drew First Blood

Theranos – Drew First Blood

A friend recently posted a question on a NODD community group about Theranos and Elizabeth Holmes. He wondered if the investor community would be more cautious about the healthtech, and if there would be stringent methods of due diligence on healthtech and a cloud of suspicion.

While I didn’t answer the whole question, here’s what I replied, and the rest of the answer. Hers was close to an ideal crime.

An audacious goal,
an unusual personality,
early big name believers, which created a ripple effect and big clout, combined with
suspended investor/supporter alertness.

It probably follows a triangular curve on a graph… Those before a tipping point (without big name college/mentor/ board, etc.) receive disproportionately high scrutiny by investors; those with, receive disproportionately less.

It was less her fault, more of those who gave in to their biases or kept silent.
Of course, it did prove bloody expensive to that one employee whistle-blower who said it cost his family some USD 400-500k in legal expenses to defend him from Theranos.

But we do this all the time. Thinking is a high-resistance exercise for us humans. And so wherever we get a chance to reduce that effort, we often take it. Be it using a student’s big brand university name-tag to transfer a lot of the goodwill and traits the university enjoys, to the student. Whether or not he or she has them.

If this is an area of interest, I urge you to read the book ‘Thinking: Fast and Slow by Nobel Memorial Prize laureate, Daniel Kahneman. It is a heavy read, and you probably won’t get it all in one read. I sure haven’t.

But he explains how we think. And why we tend to be susceptible to biases. Why we take the shortcut and assume, instead of taking the effort to verify or reason.

So coming to the question of whether the investor community will be more cautious… A few almost always are. Many will always be off/on, and a few will learn the hard way.
While they might be more cautious in health tech, they might be lax in other upcoming sectors. Besides, there’s no way of being a 100% sure because these are uncharted waters. But there always are signs that we need to keep looking for.

Amusingly, another recent headline in an old sector that is seeing new tech, didn’t seem surprising in this context. Tesla Motors is far from a stable company. And yet in 2018, its board decided to pay Elon Musk more than the combined packages of the next the next 65 highest-paid CEOs! An astronomical USD 2.3 billion!! While a lot of it was in stock, it still leaves many of us questioning the rationale of the board.

Unrelated, Theranos is a really fawesome name.

Guess Holmes took the “emergency response” (‘er’) with her, leaving ‘Thanos’ to deal with investors.

Image source: https://techcrunch.com/2019/01/24/theranos-the-inventor-review/

Guess we can’t say she didn’t warn the world about her intentions with Theranos. But all of us were probably distracted by the nanotainer.

If you own, manage or work at a company, and are grappling with a complex challenge or are in need of innovation for growth, get in touch. More here.

And you might find my book, ‘Design the Future’ interesting. It demystifies the mindset of Design Thinking. Ebook’s on Amazon, and paperbacks at leading online bookstores including Amazon & Flipkart.

Anti-Crime Balls

Anti-crime colour balls

Imagine you are a store manager, and a masked thief has you at gun or knife-point, asking you to empty the cash into his or her bag. How would you recognize the thief outside in a crowd of people? Especially if he or she had an accomplice, and the bag exchanged hands?

Or imagine if a home or bank, or the ATM or even the ATM cash van is being attacked by one or more robbers. Depending on if they have covered their faces, and on how well-lit or dark it is outside, you may or may not be able to recognize the culprits, even if they were in front of you in a police line-up.So what might help in such a situation

Surprisingly, the Japanese have had a solution for over two decades. And a very simple yet innovative one. They have been using baseball sized balls made out of colour pigment. The compound has a shelf life of a few years

Banks and other medium-to-high risk places have them at the counters. In case of a robbery, the employee at the desk merely throws a ball at the thief. The balls break on impact, spraying the colour over a 10 meter radius area. And the colour does not wash off easily, so the police or others would be able to recognize them relatively easily, even in a crowd.

So while even the sight of these anti-crime colour balls sitting in a bowl at a counter were a huge crime deterrent, it was found that whenever a crime occurred, the chances of the attendant throwing one at the criminal (perhaps for fear for their own safety), only about 3% actually threw it.

Even if this innovative solution does not find actual human use, imagine its applications. They could be used as part of automated systems that deploy these upon people crossing restricted or cordoned off areas. Or in case of suspicious activity around ATMs or protected areas.

More about it here: source

If you own, manage or work at a company, and are grappling with a complex challenge or are in need of innovation for growth, get in touch. More here.

And you might find my book, ‘Design the Future’ interesting. It demystifies the mindset of Design Thinking. Ebook’s on Amazon, and paperbacks at leading online bookstores including Amazon & Flipkart.

My Book on Design Thinking titled ‘Design the Future’

Design the Future

Hi! As some of you might already know, my book on design thinking, titled ‘Design the Future’ is out!

Despite design thinking being several decades old, we are seeing increasing relevance in its application in our fast-paced lives today. I’ve read incredible books on the subject in the years I’ve been practicing it. However, I still find confusion & uncertainty among some of those who have been practicing it, as well as those merely trying to learn it.

‘Design the Future’ is an effort to reduce grey areas by building a stronger foundation. It covers the fundamentals, examples from around the world, and my observations, notes and learning of design thinking & human behavior.

If innovation, design thinking, problem-solving, human behavior or ideation are areas of interest, I’m sure you will enjoy reading this book.

Currently, paperbacks are on AmazonFlipkartInfibeam , and other online bookstores.

If you do read the book, I’d be grateful if you can leave me a review on Amazon.

You can reach me at ‘shrutin [at] ateamstrategy [dot] in’ with your views, or if you’d like me to answer any questions or doubts you might have.

Hope you enjoy reading the book & find it useful in supplementing your design thinking skills.

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Why Design Thinking is Here to Stay

Why Design Thinking is Here to Stay

A close friend recently shared this article titled ‘Why Design Thinking will fail’, written in 2013 by Jeffrey Tjendra. Jeffrey is a designer entrepreneur and strategist. Among some of us friends, there was were points of disagreement on the article. Jeffrey does seem to have a good understanding of design thinking. This post, however, is an effort towards taking a closer look at each point mentioned there. And to see if it makes sense or not. All of this, with my limited but growing knowledge of design thinking.

Before I begin, here’s a quote by Mara Wilson. While her quote describes storytelling, I believe it offers a more far reaching explanation. With products and services too, for instance. She said, “The more specific you get, the more universal it is. (It’s a special alchemy of storytelling).” – Mara Wilson

Back to the article, here goes:

  1. Misperception of Meaning – I’ll agree, it can be misleading to some. I use either ‘human-centered’ or ‘user-centered’ design thinking in an attempt to bring a little more clarity, especially when interacting with people I believe might misinterpret the meaning.
  2. Loss of Meaning – Can’t do much about that. A lot of effective methodologies often see phases of hype and a lot of randomness being packaged and sold in its name. But as the dust settles, only the real stuff and an increased respect remains.
  3. Misunderstanding and Not Accepting Creative Elements – True. However, any company or more specifically, a management that has ever worked on any form of creativity or innovation, knows how boring, full of trials and iterations, full of mess and uncertainty it can be. Look at your kid’s school projects for instance. If it isn’t too simple, it is bound to take a lot of ‘random’, before it starts to make sense. Anyone who doesn’t understand that, will surely not use design thinking. And that’s alright.
  4. Lack of Business Elements – Coming from a management and finance background, with experience in strategy and marketing, I tend to build those critical business aspects to a design thinking project. And that is especially why the design thinking team needs to have a wide-enough assortment of skillsets. Using only UI/UX people or ethnographers or psychologists is not going to do the trick.
  5. Language and Perspective Barriers – There have been worse instances of communication gaps. For instance, if you have heard the almost unbelievable and heroic story of the Gimli Glider. An obvious technical specification got so conveniently ignored, that it put at risk, 69 occupants aboard a Boeing 767. Read the fascinating story! So, it just boils down to the intention and seriousness of the parties involved. Nothing is foolproof or idiot-proof. But a lot of change and innovation can be brought about with the right intentions. And no amount of left-brain learning and practice can fix unpredictable situations either. Because a lot of left-brain thinkers often learn a process from end to end. Any deviation could potentially leave them baffled. Creative thinking, on the other hand, helps one focus on the fundamentals. On understanding the building blocks more and more. And then, irrespective of situations or deviations to them, there is often more clarity as the building blocks can be used to better understand complexity. And it’s often easier to communicate fundamental building blocks across language barriers, as opposed to communicating complexity to begin with.
  6. Missing Future – Even design thinking veterans like IDEO have made mistakes, overestimating future demand of tech products. A strong problem or opportunity statement (which is open to being updated when you learn more about the end-user) helps reduce the risk. As does an unbiased and strong mechanism to interact with, and observe and understand needs, behaviours and desires of end-users, and capture that information towards building a solution.
  7. Wrong Implementation of Process – Which is why a lot of products and ingredients come with ‘Instructions to Use’. If an ingredient needs to be mixed and cooked, simply sprinkling it will not help.
  8. Poor Direction Scoping – This is where an intention and objective to start with, matters. There are billions of people, billions of problems and billions more opportunities. Which one or ones do you want to target. That’s what you pursue. Ignore everything else.
  9. Co-creation at the End of Process – all I’ll say is, phone sex doesn’t help create babies.
  10. Misconception of Approach to Creativity – This is true. Some people would tend to follow the design thinking process like it is a treasure map, when in fact, it is navigating your way through hostile jungle. Your senses need to be on alert all the time. Any input can change a lot of initial assumptions. That lions don’t climb trees. Or that chimps tend to rely on third party to help resolve disputes.
  11. Wishful Thinking for Culture of Innovation – Completely agree here. Which is why, a startup whose founders have the right values and give importance to innovation, can build it better into their culture, as opposed to trying to inject it into a global behemoth that has a century of history.
  12. The End Process is not the End – true – design teams, just like any other specialty teams, need to walk the talk. Leaving projects with solution advice that is abstract to clients, won’t serve anyone’s purpose. A lot of large consulting firms were infamous for doing this back in the day. Leaving clients many million dollars poorer, and with a big “report” that the client was clueless what to do with.
  13. Risk of Stagnancy – As Zig Ziglar said, “People often say that motivation doesn’t last. Well, neither does bathing – that’s why we recommend it daily.”

Thoughts?

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Number Fifty-Four…The Bike with a Bamboo Core

Number Fifty-Four…

…The bike with a bamboo core!

What does it take for innovation to be possible? Simply, just the intention. You need to want it badly enough to make it possible.

I happened to see this online a long time ago. I am still in awe of it though. People in Ghana find themselves in unfavourable temperatures, with long distances to go, but with limited connectivity. But rather than endure, with some external help, they designed bicycles built with a bamboo frame. They could easily source the other parts, which were standard to regular bikes. This innovation however, helped build a bike at a fraction of the cost of the ones normally available.

And I’ve found that regular bikes these days, corrode easily, and require considerable maintenance. These bamboo bikes however, seem to be easier to maintain. They can also be built for different sizes and for different applications (carrier, etc.). A green, economical idea that addresses so many needs. In times of compulsive and impulsive purchases all over the world, this is just the kind of impressive and refreshing innovation the world needs.

Don’t miss the video at the end.

A standard bike: source

A bike with a carrier and a carrier support frame: source

Image: source

 

You can read more about it here: link

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A Session on Innovation, Design Thinking & The Future of Work

A Session on Innovation, Design Thinking & The Future of Work

Earlier this week, I was invited to conduct a session around ‘Innovation, Design Thinking and the Future of Work’ at the Indian School of Management & Entrepreneurship, for a batch of about 170 grad students from Vaze College. The most enjoyable session I’ve had so far.

 

An ideation exercise I conducted, had the students thinking of ideas to replace the irreplaceable smartphone. And what innovative ideas they were!! Absolutely impressive! I barely heard 6-7 ideas for fear of running out of time. If only there was enough time to hear all the ideas.

 

 

The session started with about 4-5 students believing themselves to be creative and innovative. By the end of the session, over 80% of them believed they were innovative and creative. It was a truly humbling experience. With these brilliant folk entering professional life soon, the future looks promising!

 

 

While I’d really like to list out some of the ideas that the students came up with during the session, I’ll resist the temptation. In the hope that at least some of them would pursue their idea and make a world-transforming business out of it in the near future.

 

 

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What the Customer Wants

What the Customer Wants

There has been the occasional debate between two schools of thought:

You need to ask the customer what he/she wants; and,

The customer doesn’t know what he/she wants until we show them (remember ol Steve Jobs?)

A bulk of the views I’ve come across so far lie on the side of ‘ask the customer’. However, it isn’t often that you find companies that build sound offerings and experiences that delight customers. And when questioned, a lot of them agree that no one really asked the customer. The huge divide between logical sounding answers on innovation, and contradicting real-life actions.

In fact, it all depends on how much improvement you want.

If you only need an incremental edge over competitors, your company’s efforts too will be similar – marginal targets, marginal budgets, marginal efforts. This might include a superficial but fancy-sounding customer survey, or just a few managers in the meeting room thinking of ways to tweak the existing product. In all, uninspiring intent, uninspiring effort, uninspiring results.

However, if what your business needs is a leap in growth, you need radically new offerings. That’s where customer inputs come in. From personal experience, I’ve come to realize that customers themselves often may not know or be able to hint at what might be a final solution going forward. But your interactions with your customers will be the only thing that will spark of that genius idea for an innovative new solution. Nothing else can trigger that. No research reports or internal ‘brainstorming’ can. But it is the customer who will help you get there. And the whole journey isn’t like a surgical missile strike or a silver bullet or an instant mix; but more like clay pottery.

You start with a meaningless mass of possibilities, spin them around, try things, make corrections, keep spinning, more tries, more corrections, till finally you have something wonderful shaping out. Something previously unthought of. Something incredible.

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Design Thinking Basics – 3

In his book ‘Change by Design’,  Tim Brown of IDEO highlights the 3 spaces of innovation. These criteria could be considered as some of the foundation pillars of Design Thinking. Here’s a pictorial representation of the same.

What is Design Thinking?

‘Human-centered Design Thinking’ is a mindset, an approach, and some tools that help solve complex problems or pursue complex opportunities. Unlike traditional problem-solving methods or ideation, it first aims to help understand end users, final objectives or root causes. They could be about actual consumers, business culture, products, services, or even experiences among other things.

Here are the previous two posts on Design Thinking, in case you missed them:

Design Thinking Basics – 1: link

Design Thinking Basics – 2: link

Do subscribe to my blog (top right of the page) to know more about Design Thinking and other topics that encourage reflection and discussion.

Feel free to share your views. I will revert at the earliest.

And if there’s any complex opportunity or problem you are facing at your company, I might be able to help. Get in touch at shrutin[at]ateamstrategy[dot]in

You can also connect with me on LinkedIn and on Twitter.

Design Thinking Basics – 2

In his book ‘Change by Design’,  Tim Brown of IDEO succinctly explains the 3 mutually reinforcing elements of successful design programs. These criteria could be considered as some of the foundation pillars of Design Thinking. Here’s a pictorial representation of the same.

What is Design Thinking?

‘Human-centered Design Thinking’ is a mindset, an approach, and some tools that help solve complex problems or pursue complex opportunities. Unlike traditional problem-solving methods or ideation, it first aims to help understand end users, final objectives or root causes. They could be about actual consumers, business culture, products, services, or even experiences among other things.

We can then work towards innovating and building increasingly relevant solutions. And when attempting to solve complex problems, it helps us get closer to the actual root cause of problems. Then of course, the tools help you innovate and solve problems in a highly effective way.

Haven’t you noticed how, when approaching a situation logically, one can broadly anticipate a solution early on? True innovation however, usually happens in leaps, and results often surprise. Design thinking is a proven way to innovate.

The best part about design thinking: If done sincerely, the results can be as surprising, as they are effective.

Feel free to share your views. I will revert at the earliest. And if you liked this post, do follow or subscribe to my blog (top right of the page) for similar topics that encourage reflection and discussion. You can also connect with me on LinkedIn and on Twitter.