The Role of Design in Startups

  • Published on
    20-Apr-2017

  • View
    215

  • Download
    1

Embed Size (px)

Transcript

  • LUK IMRICH

    MASTER THESIS

    THE ROLE OF HUMAN CENTRED DESIGN

    IN STARTUPS

  • III

    MASTER THESIS

    THE ROLE OF HUMAN CENTRED DESIGN

    IN STARTUPS

    Submitted in Partial Fulfilment of the Requirements for the Degree of

    MASTER OF SCIENCE (M.SC.)

    BY LUK IMRICH

    Student ID number:

    Faculty:

    Degree program:

    Primary supervisor:

    Secondary supervisor:

    Date of submission:

    11972

    Communication and Environment

    Usability Engineering

    Prof. Dr. Karsten Nebe

    Prof. Dr. Ingeborg Schramm-Wlk

    21.08.2013

  • V

    ABSTRACTScope of this work contains three building blocks: Innovation, Design and Startups. By close exami-nation of these three areas, the study will help towards better understanding of startups. The most valuable finding of this project is, that Hu-man Centred Design and Lean Startup are both human centred methodologies. Thus it can be said the role of Human Centred Design is crucial in Lean Startup.

    The primary reason, it was concluded that Hu-man Centred Design is an integral part of start-ups. Comparison of Human Centred Design and Lean Startup illustrated that both of them share similar principles and activities, such as early fo-cus on users, empirical measurements, and itera-tive process.

    Another connection, is that the startups par-ticipating in this study demonstrated significant awareness of these principles and activities. Moreover, startups reported day to day usage of various Human Centred Design Methods, such as Sketching, Interviews, Prototyping, Use Cases, User Stories, User Based Evaluation, Observation.

    The aforementioned reasons may sound promis-ing, but two important limitations must be con-sidered. First, the research has only an indicative character due to limited resources of this thesis and highly demanding research which is needed for the context of startups. Second, profitability as a tool to measure success was not proven as assumed and therefore it was not possible to de-cide whether Human Centred Design is helpful for them or not.

    On the whole, this thesis showed in theory that Human Centred Design and Lean Startup share the same human centred core. This finding was reflected in research, in which startups showed significant awareness of principles and activities. Furthermore, the informants reported active use of said methods.

  • VII

    ACKNOWLEDGMENTSThis thesis would not have been possible with-out the guidance and the help of several indi-viduals who in one way or another contributed and extended their valuable assistance in the preparation and completion of this thesis.

    First and foremost, my utmost gratitude to my teacher and supervisor, Prof. Dr. Karsten Nebe, he has taught me more than I could ever give him credit for here. He has made available his support in a number of ways. He has been al-ways approachable in his own friendly way. I am sure that this was one of the reasons why he was always able to make me think, challenge and en-rich my ideas as no one before.

    I would like to thank for the support and help of Prof. Dr. Ingeborg Schramm-Wlk. She, as a Dean of Communication and Environment Faculty, took time off from her extremely busy schedule to advise me and guide me. All of this with all her kindness and wisdom.

    Furthermore I would like to thank Andrea da Sil-va M.A. for introducing me to the topic of Busi-ness as well for the support and her deep inter-est in my thesis on the way.

    I cannot find words to express my gratitude support and help of Ralph Hinderberger, who helped me not only with deep insights into in-novation, he was there as a friend who helped me to deal with all complexity of the thesis.

    I have been fortunate to meet Vidar Andersen, who unselfishly shared his deep understanding of startup with me in several sessions. Without his help I would never been able to grab such a complex topic as startups are. Although Vidar Andersen was invaluable help, it was not only him who brought me to the world of startups. I am grateful to all of those with whom I have had the pleasure to meet and share valuable in-sights. Namely, I share the credit of my work with Salim Virani, Richard Filipovsk, Michal Maxin, Vojtch Krmek and Andrej Pank.

    Special thanks to the survey participants. With-out their participation and feedback, this study would not have been possible. At the same time, I owe a debt of gratitude to Tomer Sharon, Lukas Fittl, Milo Blako, Noha Nada, Monika Pastirkov for promoting my research.

    I would like to show my appreciation to Nina Alef who went through the whole thesis, help-ing me finding the inevitable typos, and point-ing out places which were not that clear as I thought they were. I am also greatly indebted to Kristina Moysov for her final proofreading. Both of them have profoundly improved the compo-sition of this thesis.

    Last but not least, nobody has been more im-portant to me in the pursuit of this thesis than the members of my family. I would like to thank my parents, whose love and guidance are with me in whatever I pursue.

  • IX

    TABLE OF CONTENTS INTRODUCTION 1

    LITERATURE REVIEW AND THEORETICAL FOCUS 5

    INNOVATION 7 LEAN STARTUP 12 DESIGN 20 LITERATURE FINDINGS 25

    RESEARCH 31

    METHOD 35 PROCEDURES 37

    FINDINGS 39

    RESULTS 40 DISCUSSION 48

    CONCLUSIONS 51

    HUMAN CENTRED DESIGN AND LEAN STARTUP METHODOLOGY 53 THE ROLE OF DESIGN IN STARTUPS 54

    APPENDIX 57 APPENDIX A 59 APPENDIX B 61

    REFERENCES 68

  • XI

    LIST OF FIGURES

    Figure 1 The Disruptive Innovation Model 8

    Figure 2 Two Types of Disruptive Innovations 9

    Figure 3 The Business Model Canvas 14

    Figure 4 Customer Development Process 16

    Figure 5 The Customer Development Insight Cycle 17

    Figure 6 The Wheel lifecycle 22

    Figure 7 Interaction design lifecycle model 22

    Figure 8 Human Centred Design activities 23

    Figure 9 Comparison of Human Centred Design and Lean Startup principles 25

    Figure 10 Customer Development Process 26

    Figure 11 The Customer Development Insight Cycle 27

    Figure 12 Human Centred Design activities 27

    Figure 13 The hill-climbing paradigm applied to incremental and radical innovation 29

    Figure 14 Distribution of participants 34

    Figure 15 Age of startups expressed in spent months 34

    Figure 16 Motivation of startups by their success 46

    Figure 17 Motivation of startups in the very beginning 47

    Figure 18 Motivation of startups at the moment of answering 47

    Figure 19 Endorsement of focus on users, their tasks, context of use 48

    Figure 20 Endorsement of focus on meeting user requirements and produced design solu-tions 49

    Figure 21 Endorsement of focus on evaluation the designs against requirements 50

    Figure 22 The most used methods on a regular basis 51

  • Figure 23 Methods that startups never heard of 51

    Figure 24 The most abandoned methods 52

    Figure 25 Known yet not used methods 52

    Figure 26 Attitude towards innovation 53

    Figure 27 Monetization of users 53

    Figure 28 Customer Development Process 59

    Figure 29 The Customer Development Insight Cycle 59

    Figure 30 Landing page 60

    Figure 31 The Questionnaire examining the role of human centred design in startups 61

  • INTRODUCTION

    Hello, my name is Luk Imrich and this is

    my master thesis

    about the role of design in startups.

    Please Enjoy.

  • INTRODUCTION

  • 3

    REASONS BEHIND RESEARCH

    The Role of Human Centred Design in Startups is the topic that Luk Imrich chose as his mas-ter thesis. There were several reasons that lead Luk Imrich to believe that this topic is worth-while studying.

    The primary reason, Luk Imrich noticed simi-larity between principles of Human Centred Design and principles of Lean Startup Method-ology. Back then it was a superficial observation, which turned to be true in many aspects as it is argued later.

    Another intrinsically linked reason, discovered only through the reasearch, is that Lean Startup does not only share same principles with Hu-man Centred Design but as well with innovation itself. This is supported by many ideas of Peter F. Drucker, more recently Clayton Christensen, both of them are touching problem of human needs.

    At this point a problem of different roles of peo-ple in mentioned theories emerged. On one hand Human Centred Design is talking about users, on the other hand Lean Startup and in-novation theories are more specific and talking about customers. For the purpose of this work it was decided that users and customers are used interchangeably. Such decision was based on assumption that startups in general monetize people directly.

    It is also important to mention that startups are very occasionally subject of academic re-search. This caused as reported in (Bhide, 2000) due their short life span, almost non existing documentation and small size, which means that data are rarely publicly available. Therefore literature review was time demanding, since there were barely any direct references. Fortu-nately, many corresponding academic theories were discovered, and linked to the Lean Startup Methodology.

    In summary, this thesis is discovering touch-points across areas of innovation, design and starting new businesses. Such knowledge is crucial to crucial understand the role of Human

    Centred design in startups better.

    TARGET GROUP

    There are two distinct categories that might benefit from this work.

    Firstly, academics who are interested in startups and are looking for an basic overview. Specifi-cally for them, all key principles of Lean Startup were examined and backed with facts from the academic world.

    Secondly, first time entrepreneurs willing to learn more about Human Centred Design. In this case, it is demonstrated that Human Centred Design is integral or even key part of Lean Start-up Methodology. Thanks to maturity of Human Centred Design, already being described in ISO 9241 standard, there are indications that deeper understanding of Human Centred Design can help starting businesses.

    In conclusion, there are interestingly two con-trasting target groups that could benefit from this work. However such focus brought another challenge in communication, which greatly dif-fers for both audiences.

    PERSONAL MOTIVATION

    Luk Imrich has occasionally worked with startups and liked their authentic just do it ap-proach. At the same time he is interested in his studies, and once he noticed above mentioned similarities, he could not get rid of thinking, how to apply the knowledge he was schooled to such an unstructured environment as startups are.

    STRUCTURE OF THE WORK

    In order to understand startups, knowledge of innovation principles is required. Only then it is possible to explain and describe the differences and similarities between Lean Startup and Hu-man Centred Design as explained in literature overview.

    Research part is focusing on answering the key discoveries by using questionnaire analysis. Fi-nally, all findings are summarized in Conclusion.

  • RELATED LITERATURE AND THEORETICAL FOCUS

    INNOVATION | LEAN STARTUP | DESIGN | LITERATURE FINDINGS

  • RELATED LITERATURE AND THEORETICAL FOCUS | INNOVATION

  • 7

    INNOVATIONUNCERTAINTY AND DISRUPTING INNOVATIONS

    Although innovation is not directly mentioned in the title, it is one of the key topics of this the-sis. Explanation of innovation as presented in this thesis guides later understanding of start-ups. To unveil topic of innovation it is important to understand why there is above mentioned connection with startups. Startups in detail are elaborated later, for now it is enough to refer to:

    (Ries, 2011) A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty. (p. 8)

    Regarding to the definitions there is a certain level of uncertainty. What is the cause of it?

    (Cooper and Vlaskovits, 2013) suggest: Uncertainty and innovation are a duality. Without the former, there is no opportunity for the latter. (Kindle Locations 422-425)

    However, innovation is a vastly broad term, it is needed to agree on a definition. Interestingly such definition can be found in the over one hundred years old defined concept of innova-tion formulated by Joseph Schumpeter:

    (Ohsawa and Nishihara, 2012) the introduction of new goods, new methods of production, the opening of new markets, the conquest of new sources of supply, and the carrying out of a new organization of any industry. (p.1) Joseph Schumpeter 1912/1934

    This definition perfectly works even nowadays, however for the purpose of this work it is needed to be more concrete, therefore the Disruption Theory is analysed. It specifically examines inno-vation with technological core. Such focus per-fectly suits startups, since the internet as a tech-nology is a must for the vast majority of them. On top of that Steve Blank, one of the most influ-ential startup evangelist and practitioner (Blank, 2013) admits inspiration by thinkers such as Clay-ton Christensen, Peter F. Drucker, which only sup-ports the idea of startups linked with innovation.

    DISRUPTION THEORY

    Christensen identified two major kinds of inno-vations, sustaining and disruptive innovation. For the purpose of this thesis, only the concept of disruptive innovation is considered impor-tant. Therefore, the concept is discussed in detail describing low end and new market disruptive innovations.

    Sustaining Innovation

    (Christensen, 1997) Sustaining Innovation is fo-cused on existing customers who make a com-pany profitable by providing with better perfor-mance of already existing products. This way the company can sell those products with higher profits. Interestingly, it does not matter, whether the improvement was made incrementally, step-by-step or radically, with a breakthrough. It is im-portant to note that the improvement was made to serve already existing, demanding customers.

    Disruptive Innovation

    (Christensen, 1997) Disruptive innovation, on the contrary does not target high-end custom-ers in already existing markets. Offered products do not need to be even as good as competitive products. However, they are usually either less expensive or simpler or good enough to provide functionality that was not available previously. Disruptive innovation targets new or less-de-manding customers.

    Therefore, in already existing markets new en-trants are not perceived as a threat, since they are targeting less profitable customers. In new markets, there is no competition. Ultimately, new entrants can improve and thus move up the market and target high end customers.

    LOW-END DISRUPTION

    Christensen (Christensen, 1997) identified the following critical elements of disruption:

    (Bhide, 2000) Uncertainty refers, per Frank Knights 1921 definition, to unmeas-urable and unquantifiable risk. (p. 30) Amar Bhid

  • RELATED LITERATURE AND THEORETICAL FOCUS | INNOVATION

    Value Networks and Business Models

    (Christensen and Raynor, 2003) Within the di-mensions of time and performance is defined a particular market application in which custom-ers purchase and use a product or service. This application and set of customers Christensen calls a value network. (p. 43)

    (Christensen and Raynor, 2003) A value network is the context within which a fi...