How Design Thinking Can Increase Innovation Risk

Over the course of my career, I’ve enjoyed coaching a lot of corporate innovation teams to build new ventures. Several years ago, I joined one such team already deep in prototype development. The team had identified an attractive customer segment with an important Job-to-be-done. The team then hired a digital agency to help it develop a human-centered solution to address that Job. When I arrived, I was impressed by the work - the client / server application was beautiful. 

One morning, I sat with the joint innovation / agency team as it showcased the application to a group of senior leaders. The team described some of the user experience decisions it had to make. The leaders were more than happy to offer their thoughts on things like fonts and colors. Early customer feedback was positive. Everyone was excited... 

...and I was uncomfortable (and not only because I was the least hip person in a very hip digital agency). I was confident that the team had established desirability - a strong customer + Job-to-be-done + solution match - but I was concerned that it could not develop the solution into a business of the necessary scale (viability) and also that the parent corporation could not effectively commercialize that business (feasibility).

I grew increasingly concerned as the senior leaders grew increasingly excited. I sensed they considered the beautiful prototype and the positive customer feedback to be evidence that there was also a big business there. As we know, however, it’s relatively easy to get prospective customers to say they want something (particularly if they’re concerned about hurting feelings and damaging relationships). Getting those customers to actually pay for that thing is often an entirely different story.

As so often occurs in the world of corporate innovation, the team’s passion for design thinking caused it to over-invest in proving desirability when the likely deal-killing assumptions were elsewhere. Considering the unknowns that remained, the team also failed to carefully manage key stakeholder expectations. Both opportunity cost - and project risk - were high and rising. I worried that if - and when - the team discovered viability to be an unsolvable problem, the fallout would be significant for everyone involved. 

In my experience, many teams charged with creating new growth fail to keep clear the difference between “human-centered product design” and “human-centered business design.” If you’ve established desirability, you may have a winning product. A winning product is not a business, however, unless you establish viability and feasibility as well. 

Now, I couldn’t agree more with the conventional wisdom that leaders should never ask their new growth innovation teams to develop detailed financial projections. At best, teams will waste valuable time building worthless models. At worst, such a request will drive teams to explore opportunities too close to the core.

I firmly believe, however, that once teams establish an early sense of desirability, they should be expected to provide “Day One” viability and feasibility hypotheses as well. It should be fully understood (and completely fine) that those initial hypotheses may prove completely wrong. It should also be fully understood, however, that at the end of “Week One,” those hypotheses should be a little less wrong. 

Embracing design thinking - or human-centered design - is a wonderful thing. Corporate innovators should absolutely seek to appreciate the world through the eyes and in the hearts of their prospective customers and then to develop and test the solutions that might delight them. When charged with creating new growth, however, corporate innovators need to remember that compelling solutions are not necessarily compelling businesses. Moving efficiently to prove (or not) viability and feasibility is critical.