Becoming a data-driven start-up is just design thinking in fancy dress. The basic premise is that you simply can’t just trust your gut. You need to interrogate “the data” to understand the reality, writes Brandon Fairweather, strategy director of Responsive.
Our favourite war story concerns the bank that engaged us to design a new app. Given their knowledge and experience they were quite clear that they knew exactly what their customers wanted, and we believed them. Specifically, there were two things they knew their customers wanted.
We designed a beautiful app that provided those essential two things, but when we tested it with their customers, they had totally misunderstood the one, and were mistaken about the other. In short, we had to start again, this time beginning with a thorough definition of the problem (i.e. what customers wanted and weren’t getting). The end result: a successful app.
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This mistake cost the bank a cool R5 million.
We tell this story because it encapsulates an approach that is so common in business, and that scuppers so many good projects—and even companies. One could call it “the authority trap”: the belief that we understand our customers and the problems they face, and so we are uniquely suited to coming up with the product or service they want.
The challenge is that we don’t recognise how incorrect it actually is to assume we know what our customers want whereas what we actually understand is our business and its goals. It’s our customers who understand what their problems are.
We should bend over backwards to get them to share that priceless understanding with us—it’s the secret sauce that will inspire the killer product or service that will change everything.
Having fallen into the authority trap, one inevitably falls into the “solution trap”, which is focusing on developing a fantastic solution to a non-problem.
The antidote is an approach called design thinking. It sets out a sequence of actions that will ultimately result in a product or service that genuinely solves a customer problem. Some products partially do the job, and so do fairly well, but they are only better than nothing.
By contrast, a product or service that exactly solves a problem is not just used, it is, dare I say, loved. And a loved product or service has to spend much less on marketing because it effortlessly creates brand ambassadors and grows by word of mouth.
Big benefits of design thinking
The financial benefits are substantial. For example, Airbnb overcame a somewhat shaky start by undertaking the exercise empathising with its customers. Based on this exercise, Airbnb came to the conclusion that pictures of the accommodation needed to be of a higher quality and should show all the rooms rather than a selection.
Airbnb also realised that special features needed to be listed and that the benefits of the location (such as local restaurants or sights, good transport links and so on) should be highlighted.
The result was immediate and significant: revenue doubled within a week.
Or consider the Bank of America, which engaged with customers to find ways of increasing the use of its savings accounts. By following their customers’ lead, it gained over 10 million new customers and new savings deposits of $1.8 billion.
Design thinking in one form or another is being used by some of the world’s leading brands to create products or services that customers actively want. Examples include Apple, Google, IBM, Samsung, Uber and, of course, Airbnb. Design thinking is now also being taught at leading universities such as Stanford, Harvard and MIT.
So how does one go about design thinking? Our view is that there are five actions that fall into two phases. The first phase is to make the right thing.
This involves speaking and listening to customers and then defining what their problem is. First and foremost, fall in love with your customers’ problems.
The second phase is making the thing, whatever it is, in the correct way. Spend a lot of time coming up with concepts and then, crucially, making prototypes to test with customers. Testing is crucial, and only once its lessons have been identified and incorporated can one move to implementation.
Make the right thing, and then make it right.
In short, there are two traps to avoid. One is thinking you know what your customers want (the authority trap), and the other is focusing on the solution (the solution trap)—it’s much more important to focus on the problem. The solution will emerge naturally out of a deep understanding of what the problem is.
In conclusion, one could argue that the growing emphasis on becoming a data-driven organisation is just design thinking in fancy dress. The basic premise of the data revolution is that one simply cannot trust one’s gut, one needs to interrogate “the data” to understand what the (often counterintuitive) reality is. Similarly, design thinking means beginning with data derived from your customers rather than your gut feel and proceeding from there.
We all know that love is the strongest human emotion. If we can harness its power in our businesses, the results can be quite astounding.
- Brandon Fairweather is the strategy director of Responsive, a subsidiary of the listed fintech group. Capital Appreciation Limited. His views does not necessarily reflect the opinion of Ventureburn.