Who do you call when you’re in need of innovation help? For many companies, the answer is a design thinking expert.
Design thinking first emerged in the 1990s and has grown in popularity. It’s a problem solving approach that gained momentum at Stanford. Now firmly embedded in Silicon Valley, it has had a worldwide impact. The systematic approach appeals to many corporate managers.
But businesses make a mistake when they rely solely on this approach to innovation. In today’s business environment, there are two primary ways in which design thinking falls short.
1. Design thinking is idea focused.
Design thinking starts with a goal in mind. It encourages people to identify problems and then seek the solutions to them. The solutions are often creative and result in an unexpected outcome.
The problem with this is that great ideas don’t always make it to market. In the context of a business, market acceptance is key. And while the solution developed in the design thinking framework might be fantastic, if it’s too expensive to manufacture or lacking in customer acceptance, etc., it might remain just that – a great idea.
2. Design thinking is feedback focused.
Design thinking encourages people to solicit feedback from stakeholders. This is done through both ethnographic observation as well as direct conversations. As more data and opinions are collected, the design thinking team incorporates the feedback into the product / service build. However, despite all of the conversations, the most important one is often missing –that of asking someone to commit to purchasing the new product.
Effectuation addresses these shortcomings in the following ways:
1. Effectuation is assets focused.
Effectuation starts with what you have on hand. Tangible assets, intangibles, excess, slack, waste, anything that is accessible is fair game. This shifts the emphasis away from an acquisitive strategy to one of optimizing existing resources. In today’s budget constrained environment, it’s a much more effective approach for organizations. Rather than focus on building from scratch or buying from others, it begins with leveraging what is already available and building out from there.
2. Effectuation is commitment focused.
Effectuation is based on commitments from participants. Decisions to invest, bring products to market, change course, etc. are based on actual commitments from stakeholders. These commitments can take many forms. They can include letters of intent, prepaid purchase agreements, partner contracts, among others. The primary objective is to attain stakeholder agreement to contribute resources to the venture to ensure its success.
Many of the companies we work with begin their discussions with us by saying “we did lots of customer research where they told us they liked this idea, but when we brought it to market it didn’t sell”. This is because they only solicited feedback. We prevent this by showing them how to use a commitment driven approach when interacting with customers and other stakeholders.
Even innovation has undergone innovations since the 1990s, when design thinking emerged. Add effectuation to your innovation skill set. Whether as a complement to design thinking or as a stand-alone innovation tool, effectuation works.
--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC