Why Lean Innovation is the new way to build successful products

Why Lean Innovation is the new way to build successful products
The way companies build successful products has fundamentally changed. New technologies like smartphones, social network or cloud computing have enabled tech-giants like Apple, Google or Amazon to become the most valuable companies in about 20 years.

This is the first article of my series “Lean Innovation — How to develop successful products today”. It’s about the shift of innovation and product development methodologies over the years.

All these changes happened due to the way how people consume their products. To deal with the change of people’s behavior and product expectations, companies had to shift towards more flexible, agile and especially customer-centered practices — from staged Waterfall to Agile to Design and Lean methods.
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Although still about 95% of large organizations use a Waterfall approach for developing new products, leading companies apply lean and design methods to develop new products.

Waterfall (1990s)

The Waterfall method is a sequential development process. The progress flows steadily towards the goals (like a waterfall). It requires fully planning of projects deliverables and development activities in advance.
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Changes are expensive especially in later stages, as most of the time and effort is spend during the design and analysis phases. Every phase has clear goals that need to be achieved in order to move over to the next phase. This prevents customers to review and feedback on projects before the final release. Even if suggestions were solicited, projects are less flexible about accepting feedback. Although Waterfall is a less flexible approach, it is more beneficial for teams that need to execute “the plan” — on time and within budget.

Agile (1990s)

With the rise of the internet, the long development cycles of Waterfall were no longer capable to plan ahead what people need. With the globalization and the new economy of online businesses competition has led to a lot more competition than before. A more flexible product development process was required, as companies were forced to react on market trends in the middle of their development cycles.

Agile refers to a manifesto, which was published in February 2001 by 17 software developers, who have to discuss on lightweight development methods. It is based on an iterative approach, instead of an in-depth planning at the beginning of a project like Waterfall. Teams will always adjust the scope of work to ensure that the most important items are completed first.
The goal of each iteration is to produce a deliverable of working product. As constant feedback from end users is encouraged, Agile enables to react to changing requirements, as they are expected over time. Therefore, these methodology is the right choice for projects when it comes to manage and reduce the risk of changing requirements.

Design Thinking (2000s)

Also known as human-centered design, Design Thinking as a concept has been around for a while under different names (e.g. user-centered design, service design). Design thinking has come into vogue because of its beneficial problem-solving technique and its scientific method. The popularization of the Design Thinking process and methodology is related to approach by IDEO in 2001.

“Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Tim Brown, Founder IDEO

This “designer’s toolkit“ is the application of methods and processes which are conventionally associated with designers — think creativity, the flexibility of ideas with a clear understanding of people’s behaviors and needs. Design Thinking is a structured process, that consisting of 4 fundamental phases.

Beginning with the discover phase of a target group, the identified needs and problems will be synthesized to a few main insights. The insights are the foundation for the concept phase, where it is the goal to create many ideas, while the most promising ideas are going to be developed as prototypes. Prototype tests are the last phase and ensure that the solutions meet the needs of the analyzed target group.

Design thinking is created because big corporations lack the ability to be creative and able to create innovative products that meet the needs and problems of their customers. Today, the majority of corporations operate with analytical thinking. This thinking prevents from creative “out-of-the-box” thinking, which is required for disruptive innovation.

This creative and especially “wide” thinking (some call it “crazy-thinking”) is related to the term design. To innovate, businesses must have the capability to design. To design, an organization needs to fuse design internally to create a culture that fosters creative thinking.

The significant difference of Design Thinking is the placement of the customer at the center of every activity. Additionally, human-centered design emphasizes on experience over efficiency, as good experience is the motivator for people to interact with products.

Lean Innovation (Startup — 2000s)

With the publishment of the book “The Lean Startup” by Eric Ries in 2011, innovation and product development practices have become “Lean”. The goal of Lean Startup is to avoid developing products or service that nobody needs. The Lean process incorporates user feedback and early experimentation.

The methodology is known for the philosophy “fail early to succeed sooner”. Failures are accepted because they enable learnings, which are often required for breakthrough success.

Lean methods are also often called “customer development”. The goal is to find out what customer want before actually building the final product. The principle of Lean is to build assumptions and hypothesis, which you’re trying to test, while you make progress from the learning of your experiments.

Technology has enabled global competition

Digitization and the enormous speed of change do no longer allow companies to simply build products without incorporating customer needs. In the past, delivering the wrong product to customers had led to failed projects. Today, continuously failing to deliver what customers need, leads to total business model failure. Nokia or Kodak are just the 2 most famous examples to be mentioned here.
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Technologies like smartphones, cloud computing, and open source have enabled to build products much faster and cheaper. The barriers for creating products or entering into markets is lower than ever before. That means there is a lot more global competition today. Companies need to be obsessed with understanding customers and what they want. A customer can easily switch to other products. The impact of brand loyalty to consumer decision is declining with every year.

Focus on business models, not only on products

Lean and design thinking are both customer-focused and based on an iterative approach. Customer engagement and feedback is the engine for making progress. The key difference of Lean Innovation is to go one step further as it considers the whole business model around a product.

One of the reasons why Amazon has become the leader in e-commerce was their strong commitment to customer service. It helped them to gain trust and loyalty, although they didn’t earn a single dollar with it. Today, successful companies differentiate with their business model, not their product offering.

Engage customers continuously

In the new world, successful companies will have one thing in common: an exceptional understanding of customer behaviors and needs. As behaviors and needs are changing fast, the only way to ensure to build what customers need is to engage them continuously. True customer understanding is the foundation for long-term business model success.

Combine Design Thinking, Lean and Agile
While Design Thinking, Lean and Agile can be applied alone, the best results come from a combination of those approaches. While Design Thinking helps to gain insights into customer needs and behaviors, agile helps to efficiently develop and deliver solutions in an efficient way. Use Lean practices and gain insights during customer or assumption testings. While you continue this build-measure-learn cycle you will get steadily closer to a successful product and a working business model.
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About the Author

Stefan is a passionate Design Thinker. He is the founder of Pyoneer, a SaaS solution for Design Thinking, which helps teams to do understand customer needs and to track insights from customer research and testing.

What do you think about Lean Innovation? What is your approach to successful product innovation? Leave a comment and help me to share this story! Give it a ❤ if you liked it 🚀

Why your customer is key to success today more than ever before

This is the first story of my series “Lean Innovation — How to develop successful products today”. It’s about the shift of product development that happens and they methods that have changed over the past 50 years. Like “Lean” manufacturing changed the way companies are building physical products today, Lean and continuous innovation is on the way to become the same standard in the way to invent and develop successful products today. During the next weeks I’m publishing multiple articles on the following topics:

  • Why Lean Innovation is the new way to build successful products
  • Comparing Lean Innovation methods — Design Thinking vs. Lean Startup vs. Lean UX
  • How to create an innovative culture to win in future
  • Chase the insights and customer problems, not the solution
  • How to deliver a better customer experience and real customer value
  • Simple steps to create successful products and services
  • How to combine Agile, Design and Lean in parallel
    Lean-Innovation-Process-detailes_small

Why I’m writing about this?

We know we learn by trying, sharing, benchmarking and asking questions! My startup team at Pyoneer are big fans and supporters of Design Thinking and the “Lean” movement (self-explaining, as we’re developing software for Design Thinkers ;)). We strongly believe that products and services are something to make life’s easier for people. We’re still stuck in an old world, where too many products are failing. Companies waste needless time, money and especially the energy of employees in build products that nobody wants. Our ultimate goal is to help companies to build products that people will love.

I’m sharing our experience and my thoughts with you — I want you to participate too, as we can all learn from each other!

“But I am completely new to Design Thinking and Lean Innovation… Will I learn something?”

Absolutely! I’m going to share my personal experience of how we:

  • used Design Thinking to find a product that solves customer problems
  • applied Lean Startup to achieve Product-Market-Fit without having an existing product
  • combined Design Thinking and agile software development in an efficient way

The goal if the story is to motivate people to become true innovators and help everyone to understand the principles of good and efficient product innovation. Additionally, I want to give people instruction and share good examples on how to apply Lean Innovation correctly.

"I’m working in a corporation and don’t want to found a startup. What do I get out of it?"

No matter if you work for a large company or currently planning to grow your own business. The articles point reasons why and how everyone can become an innovator. Good innovation comes most of the times from the right mindset. Lean only means to reduce waste, nobody needs. A “Lean” production creates only products, when a customer places an order, instead of overproducing and waiting until someone buys something. A “Lean” Innovation does only create products when they notice a customer problem or need that could be solved by a solution. This is valid for people involved in engineering or product development as well as people working in human resource. “Lean” means always to pull, instead of pushing.

One more thing: One principle of innovation is always to make the first step and this one could be yours. Let’s do this!

So, even if you are learning or you do have experience, you can:

Follow our steps and apply the learnings to your own project

  • Share insights, articles, and comments on LinkedIn!
  • …Or maybe you can come up with your own articles?
  • Ask questions! I’m happy to chat 🙂
  • You might also disagree with some of the thoughts: That’s why I want you to disagree and discuss with us too!

When is it happening?

The series will be released during the next 3 weeks. Follow my posts on our Pyoneer blog, on Medium, on LinkedIn or join the discussion on our Design Thinking and Lean Innovation Community at Slack!

Sign up to get receive the "Lean Innovation" story and updates from Pyoneer on your mail.

Thanks for reading! What do you think? Leave a comment and share our story!

Why companies and leaders should reconsider their current philosophy of project management and why they cannot afford to ignore the value of Design Thinking for their organizations!

Design Thinking and Lean Startup are totally popular, although these practices exist already for years. Gartner IT research estimates that by 2021, more than 50% of established corporations will be leveraging lean startup techniques at their business level to increase the pace and success of business transformation. Industry leaders like IBM or Procter & Gamble have trained their whole organization with the disciplines of design thinking, to become more innovative and especially customer-centric.

There are clear indicators that a transformation of organizations and especially operations towards a more customer-centered approach is happening.
Design Thinking and other human-centered methodologies like Lean Startup or Lean UX have become mature. In this article, I’m going to look at management practices and why we believe a new era has just started.

Digital disruption is present in every industry!

Technologies such as mobile devices, social networking, cognitive computing, and the Internet of Things are changing the way companies design, manufacture, and deliver almost every product and service. It also significantly increased the pace of change in business as a whole, requiring organizations to become agiler.

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This, of course, has a disruptive impact on Product Development and Innovation as a whole. Traditional industries with dominated market position and business models (keeping prices artificially high) don’t work in a digital world, with shorter and more frequent product development cycles, global competition and the rise of freemium services.

Customers and users are now connected via social media, which allows updating people in seconds about their experience with products, services or companies. An increasing number of consumers depend on their purchasing decisions on reputation and reviews. Shitstorms can ruin brand reputation within a couple days, what marketing departments have built up over years.

Digitization forces organization to deal with completely new challenges and market preconditions. I know this isn’t highly advanced research, but I want to emphazise on the new requirements and settings for businesses and their organizations.

Why Digital Transformation should receive more consideration

Digital Transformation is one of those buzzwords, that you hear by almost every company, although every transformation is going to be different for organizations.
You can define digital transformation, as the integration of digital technology into all areas of a business.

It results in a:

  • fundamental change in how businesses are operating and how they deliver value to customers.
  • cultural change that requires organizations to continually challenge the status quo, experiment often and get comfortable with failure.
  • change of organization and practices, going away from long-standing business processes that companies were built upon in favor of relatively new practices that are still being defined.

To handle this changes, many different management approaches have evolved, claiming to be the best and most efficient way. Companies have understood that linear methodologies like Waterfall, which follow a sequential and linear process of development, doesn’t work. The model originated in the manufacturing and construction industries, both highly structured environment where changes can be too expensive or sometimes impossible.

With the need of shorter product life cycles as well as higher flexibility during development, agile project management has become the standardized way of managing projects. Agile refers to a manifesto, which was published in February 2001 by 17 software developers, who have to discuss on lightweight development methods. It is based on an incremental, iterative approach, instead of an in-depth planning at the beginning of a project like waterfall. Changing requirements are expected over time and constant feedback from end users is encouraged. The goal of each iteration is to produce a working product.
Agile-1

While Agile was traditionally created for software development, it can also be used in many other projects and industries. Many practices in Agile, like stand-up meetings and visual management, are so common and can apply to any industry. It’s important to remember that Agile software development was born from the principles of Lean manufacturing and organizational learning.

There are subsets of Agile, like Scrum, which is one of the most popular process frameworks for implementing Agile. It follows a set of roles, responsibilities, and meetings that never change. But as agile, scrum also has its limitation on considering and integrating customer problems and needs.

Human-centered (Lean)Management

During my interviews with leading enterprises like SAP, BMW, Lufthansa and many others, to identify their philosophy of doing digital transformation. “Our tech teams are applying Agile, product teams are trying to integrate Lean and with the increasing need of customer- and user-centricity we want to combine everything with Design Thinking.

But which one is the best?

While agile and scrum helped teams to gain flexibility, speed and the ability of continuous improvement, this generation of project or product management is limited in its capability of understanding and integrating the customer in team activities.
Human-centered development approaches add the most crucial dimension to the success of any company activity — the customer!

Put the customer at the center of everything — focus on customer value if you’re struggling to get alignment as a team. Ask yourself on a regular basis:

  • How do we know we’re shipping something users care about?
  • How do we find out?
  • How does that affect what we prioritize?

Why Design Thinking and Lean Startup have come to “be”

Design Thinking helps teams to emphasize on the customer problems and needs while Lean Startup helps with its build-measure-learn loop to identify the best-fit solution for the identified problems. Be aware that none of these methods are sufficient alone and only reveal their full potential in combination.

Successful companies nowadays neither stand out because of their most efficient production, nor their best engineers, sales managers, marketing commercials or whatever. It’s more their dedication to understanding the customer as well as their strong commitment to serving customer problems and needs.

Amazon is the best example of executing this practices in perfection, what helped them to achieve best-in-class customer satisfaction ratings and has enabled them also to dominate multiple markets (E-commerce, cloud web services, E-book reader). As more companies understand the real value of customer insights, the better they can target their business activities like product development, marketing or strategy in general.

Applying human-centered correctly helps companies not only to become more agile or flexible in their product development. It allows also to reduce waste in developing the wrong products as well as it helps to avoid investing money and resources into not required solutions. We believe human-centered has the opportunity to reveal the full potential of every organization and especially their employees. It helps them to alignment their teams towards customer value what will help to create successful products and services. This is why we believe no company can afford in future to disregard the relevance of customers and to avoid using human-centered methods in their organization.

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Neither Design Thinking or Lean Startup nor agile or user experience (UX) are new for companies. To become successful in future, I believe it´s a matter of how well companies combine all of those practices. Efficiency will be measured in who well teams have a common understanding of their customers, as it allows them to target their work more precise towards the desired outcome. Designers teams can create better user concepts, development teams can prioritize better on features based on the customer value and manager will gain more confidence in taking the right.

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What remains open is the question of how Design Thinking generates an interpretation of user needs that are so trivial and non-complex, that teams can build on this insight in further processing Agile mode. Is an interface between Design Thinking and Agile imaginable, which allows a simple planning and makes sequential processing possible?

There is good news — Pyoneer is going to building this interface!

Thanks for reading! Leave a comment and help us to share our story! Give it a ❤ if you liked it 🐠

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How Pyoneer started as a Lean Startup

What would you think if there was a manual to create innovative products, experiences or services? I’m not talking about incremental improvements, like e.g. more pixels on your screens or few more horsepower in your car’s engine…
I’m talking about disruptive innovation, that change behaviours of users while improving people’s life!
No worries, if you’re sceptical now! In general innovation is all about humans. Day by day, humans create things for humans!

I want to share my experience from the moment I got into contact with Design Thinking to the moment where I have noticed a deep problem for a specific group of people. That’s when I came up with a great solution to this problem and finally we grew into a rockstar co-founding team to run a Lean Startup now.

I’m excited to share this method and experiences with you. I practice, love, use, teach, and learn from Design Thinking every single day at work, and in life. And I hope to inspire others to apply it in their daily work, as I promise it will guide you to the solution of problems.

Design Thinking – A problem-solving methodology

Developing successful innovative business models, products and services has become one of the most important success rate factors for today’s business landscape.
82 percent of CEO’s of world’s leading companies have concerns about whether their company’s current products or services will be relevant to customers 3 years, the "2016 Global CEO Outlook" survey from KPMG found out.

Especially in times of emerging disruptive technologies, glutted markets, decreasing product lifecycles and continuously increasing expectations of customers. One of the main reasons is digitization and the enormous speed of change.

Speed-of-change
http://www.digitaltransformationbook.com/the-speed-of-change-4-waves-of-digital-acceleration/

Design Thinking is one of the methods to achieve innovation! Most successful startups have successfully applied it and continuously develop their products and services with this framework (like AirBnb and Dropbox). It goes well beyond the plain “look & feel” of an object: it is actually a state of the art problem-solving methodology!

“Design Thinking is a human-centered model that encourages creativity and innovation to create a product or service that solves a complex problem for your target customer or user. It can help you innovate a new product, design a simple solution to a complex problem, or to get the whole team involved in generating design ideas so they feel included and believe in the process.”
David Kelley – IDEO founder

The challenges of a modern business, it’s global and cross-industry aspect urged for new problem-solving frameworks, capable of producing the extraordinary solutions. Design Thinking offered a win-win strategy: “human-centered design that is all about looking out from the inside—rather than outside in”.

Digital business transformation requires innovative, out-of-the-box thinking. Design Thinking is a natural fit as many enterprises seek to transform and, in some cases, reinvent themselves as digital businesses. It was developed by IDEO and is taught at the d.school: Institute of Design at Stanford and HPI school of design thinking in Potsdam – both founded by Hasso Plattner (Co-founder of SAP).

It involves massive collaboration and frequent iterations and has five very clear phases:

  1. Empathize
  2. Define
  3. Ideate
  4. Prototype
  5. Test

Design-Thinking-Process

I’m going into detail on the Design Thinking process in some upcoming articles, that’s why I’m going to skip this for now.

Lean Startup – an efficiency model for innovation

The term “Lean Startup” was developed in the IT industry for software startups and became very popular with the book “The Lean Startup” by Eric Ries in 2011. "Lean" principles were developed in the early seventies by Toyota to optimize production processes and reduce any sort of waste in the process. The Lean Startup process claims that the most efficient innovation is the one for which there is an actual demand by the users. Or put in other words: the biggest waste is creating a product or service that nobody needs. This concept is highly relevant for any strategy or method that aims at creating innovations.

Design Thinking and Lean Startup are not the same, but comparing them you’ll notice that they have one thing in common. It is all about the customer. Both methodologies try to identify customer needs in order to create appropriate solutions. The method of lean startup goes one step further: try to test core business assumptions early in the product development process, sometimes even before any product is built at all. Track your assumptions and learn from the insights that you have gathered during testing with your customer.

Continue this build-measure-learn cycle and make progress in an iterative way, while getting closer to the solution your customer wants to have.

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Pyoneer’s start as a Lean Startup

At the moment I have to admit to put all my energy and time into founding a company. It was also clear that perfect execution is required in everything we’re going to do. I knew it will be a super difficult and long way. There are many statistics of failing startups and the figure is around 90%. To become successful it’s not sufficient to have a good product idea or excellent sales people. **The perfect balance of the right product, while serving the market with excellence and managing everything by an awesome organization, is required. **

When our founding team grew together, we’ve noticed to have a perfect balance of complementary skills – the most valuable achievement in the early days for a startup! We are convinced that we’re going to be successful, no matter where the future is leading us to, but finding a perfect set of founders is the main groundwork. Everyone of us is somehow different and there are often some deep discussions. But we see this more as fuel for our spirit!
As we had founded a team, we knew that there was a growing market and had a solution for a problem so we decided to build up everything using Design Thinking methods. We wanted to execute in perfection from day 1! We created target groups, analyzed their behaviours, interviewed to understand their jobs and problems. In Lean Startup everything is about validating your assumptions and hypotheses, so these steps were required in order to gain confidence if our tool was to solve their problem. Additionally, we created mockups and digital prototypes that we again showed to our target group to gain feedback whether our solution is sufficient and viable for them.

As it turned out most of our assumptions were correct so we decided to build our solution – and to found our startup Pyoneer. It’s a Software-as-a-Service application for documenting, visualizing and managing all your innovation activities based on Design Thinking and Lean Startup methodologies. With Pyoneer we want to provide the right toolset for each process phase and guide the user through the process. We also want to enable access and full transparency of collected information and results for everyone – to help teams across the globe to convey the big picture in one place.

We are currently in the development and are going to release our first features the next weeks and are totally excited to see which feedback users are going to give us. We’re seeking this feedback, as it’s essential to get better and know exactly what our customers need.

We believe that if we keep listening, thinking, creating, validating, learning and always being open and transparent we’ll end up with the right amount of customer value and we’ll create a solution that people love.

As you can see we started with a Lean Startup culture and we will continue on this as we’re positive it will guide us to success! I hope I could inspire some of the readers and would be happy to hear your opinions. Stay tuned if you are interested in our path, we’ll be back soon!

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