Recently Mountainise team had the fortune of attending the Design Thinking workshop by Shahid Khan, Senior Global Director of Design Thinking at SAP, Palo Alto, Silicon Valley California. Design Thinking has revolutionized the processes of the business world. It allows creative solutions to complex problems, allows collaborative innovation and ensures the results are humane. The workshop was organized by National Incubation Centre (NIC), Lahore for the top ten shortlisted startups for incubation and acceleration of which Mountainise was one of the qualifying startups. The 5-day workshop was a whirlwind of an experience.
An important concept that was discussed was the value of creating and finding a healthy ecosystem for the maximized productivity of a start-up. No one has an original idea. All the ideas already exist. An innovator is the one who makes the already existing idea into a better one. Inventions used to be 1 percent inspiration, 99 percent perspiration. However, now it’s a combination of 50 percent collaboration. Companies trying to commercialize innovations won’t succeed unless suppliers, distributors, and other partners can and will do their parts. The first and foremost thing to do is to test the idea on a small scale. The prototype must be tested at a limited scale in the least possible cost to measure its value proposition and then can be scaled up depending on the market response.
Timely testing of an idea plays a crucial role in its success. The case of Airbnb is a classic example of how to test your idea at a small scale and find if there exists a market for it. Airbnb founders Brian Chesky and Joe Gebbia just moved from New York to San Francisco and noticed that all hotel rooms in the city were booked, as the local Industrial Design conference attracted a lot of visitors. Broke, they decided to rent their own apartment and bought a few airbeds and set up a site called “Air bed and Breakfast” and requests started pouring in on LinkedIn. They realized that they were onto something. After a lot of pivoting, the idea succeeded gradually and they traveled back to New York, their biggest market, to meet the users. What they find out is that the main problem is that the pictures of most listings aren’t good. They bought a camera and went door-to-door to take better pictures of the listings. The company finally gets some traction after the founders gain insight from the user research and now has a revenue of 2.6 Billion USD (2017). It can be inferred from Airbnb example that it is a visual world; users need to be captivated with visual and then driven through content.
Ron Adner in his book The Wide Lens, suggests a new strategy to consider to ensure innovative ideas win: the minimum viable ecosystem. An innovator first thought should be how will the product fit in the already existing system or how to create a new ecosystem for the new idea. When formulating your innovation, everyone who has partnerships to think through should be sure to consider strategies involving the Minimum Viable Ecosystem.
Where to Begin
Innovation Ecosystem Analysis
Before launching any idea it is always recommendable to do an ecosystem mapping which leads to insights, innovation, and excitement. An ecosystem map is a visual depiction of the landscape within which a business operates used to identify gaps in essential services and functions, strategizing beyond symptoms of a problem, and addressing the larger systemic issues and problems at play. It’s a way to graphically represent and grasp the complexity and dynamics between all the entities, functions, relationships, opportunities and environmental factors within a particular issue area.
Step 1 Define Key Players
Constructing an ecosystem map begins with identifying the key players or communities involved in your ecosystem. The community consists of industry participants, start-ups, collaboration institutions, technical and business services. The community includes:
- Resource providers
- Key allies & Primary Partners
- Key Stakeholders
Step 2 Define the Environment
The second step is identifying the environmental conditions affecting your business. The environment is core markets where the community coexist and the adjacent markets from which know-how is shared. Environment includes:
- Politics and Administrative Processes and Structures
- Geographical infrastructure
- Societal norms and culture
Innovation ecosystems can be defined as complex structures formed by the interaction of the participating community within an environment. A healthy ecosystem is one, which participants can thrive and grow, it self-regulates and adapts as the market needs evolve. The goal of the ecosystem analysis should be to find discontinuities in the communities, the environment, and the structure. The analysis allows the firm to make strategic decisions on business planning, product strategy, R&D exploitation, and technology acquisition.
Step 3 Visualise
The next step is to create a visual map with the collaborative effort of all the team members to get an overview of the overall picture by collaborating with with those who will be strategizing and planning.
Step 4 Strategize
The visual maps give insight and identify problem areas. Mapping relationships among all the constituents who are related to an idea give the ability to evaluate each individual's willingness to deliver. Within an ecosystem cycle if any single community member is negatively affected by the innovation it could flop. For sustainable innovation, all the parties and stakeholders involved in that ecosystem must have a positive value.
Innovation Ecosystem Analysis also includes taking into account the co-innovation risk- reliance on partner companies to innovate. Nokia failed to reach its benchmark of selling 300 million 3G phones in the market by 2002 because the company paid insufficient attention to the software makers whose offerings would have made the devices more attractive.
Ecosystem analysis also involves calculating adoption-chain risk: your reliance on retailers and distributors embracing your innovation. The success of an idea is very much dependent on how readily the affecting community members adopt the change and what price are they willing to pay for it. For example, despite the benefit of digitizing the movie cinemas it was hard to convince the theatre to chains to adopt the technology because the cost of upgrading was too high.
To sum up, all the following steps should be kept in mind to assess the risks involved in each of the steps:
Identify your customers
- Who is the final target of the value proposition
Identify your own project
- What is that we need to deliver?
Identify your suppliers?
- What inputs we will need to construct our offer?
Identify your intermediaries
- What stands between us and the customer?
Identify your complementors
- What needs to happen before each intermediary can adopt the offer?
For every element on the map
- What is their level of co-innovation and adoption risk?
Innovation begins with empathy. The most important thing to understand is how to innovate by empathizing with your end users. Companies that pay attention to their customers have an advantage. As also mentioned previously in our blog, companies with a customer-centric approach that take into account the users’ pain-points and truly try to understand what the user really wants usually win the game. Higher empathy leads to stronger financial performance, increased customer satisfaction, customer loyalty, and greater innovation. Customers are the center of the universe for any business. In the end, it’s the user experience that wins and not the technology.