What is Design Thinking and Why Do Entrepreneurs Need to Care?

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Design thinking seems to be all the rage in business and entrepreneurship circles, but the momentum has been building for over 13 years. In 1999 I was in the Doctoral program at the University of Colorado-Boulder studying strategy and entrepreneurship. While procrastinating on reading 400 pages of scholarly research articles for a seminar the next day, I flipped through channels one night in my tiny apartment passively watching mindless TV (on a 19” screen!). It was 10:30 pm and the familiar voice of Ted Koppel’s Nightline caught my attention. I heard Koppel say, “Tonight, the deep dive – one company’s secret weapon for innovation.”
He had me at deep dive! I was enthralled with the show, the company, and the methodology. I immediately ordered an educational copy of the program (on VHS!) and showed it to my undergraduate entrepreneurship class the following week. After using the video in my course, more than half of the class had dreams of working for one company. IDEO. With that type of student enthusiasm I thought to myself, “There is really something here for entrepreneurs.”
Since then I’ve been playing around with elements of design thinking in my entrepreneurship courses to help students create better ideas and identify bolder opportunities. Even at the executive level I’ve starting using design thinking because it creates an incredible “mindshift” among executives. Design is no longer a support function; it’s strategic.
For those of you unfamiliar with what is rumored to be the best selling Nightline video of all time you may view an excerpt here. The Nightline premise was simple. IDEO was challenged to reinvent the shopping cart in 10 days. The outcome was impressive but the methodology was inspirational. The principles of the method have since become known as design thinking.
For entrepreneurs I use design thinking to generate bold ideas. I borrow from Tim Brown, author of Change by Design and CEO of IDEO, and highlight three parts of the design thinking process.

1. Inspiration: Observing users in their own environment to identify latent needs. Takeaway: See the world differently in order to capitalize on needs that your competition hasn’t taken the time to recognize.
2. Ideation: Developing new ideas based on observations to address latent needs. Takeaway: Don’t depend on your customers for the big ideas.
3. Implementation: Testing assumptions of new ideas to continuously shape them into viable opportunities. Takeaway: Fail quickly and often not to kill an idea but to make it better.

In a paper recently published with my colleague, Patti Greene, we stated, “Design is a process of divergence and convergence requiring skills in observation, synthesis, searching and generating alternatives, critical thinking, feedback, visual representation, creativity, problem-solving, and value creation. Teaching entrepreneurship through a design lens can help students identify and act on unique venture opportunities using a toolkit of observation, fieldwork, and understanding value creation across multiple stakeholder groups” (p. 65) But what is most compelling about the approach popularized by IDEO is this notion of human-centered design.
Human-centered design involves a different starting point in the creation process. In typical scenarios where new ideas are being vetted we often jump to answer two questions: Can it be done? Will it make money? A design thinking approach forces you to answer an entirely different question in the beginning while not even addressing feasibility and economic viability.
The first question is: What do people need? This isn’t marketing 101 where I encourage you to talk to customers and ask them what they need. This is, however, anthropology 101 where you observe people in their environments to understand their lives, develop empathy, and uncover latent needs. Latent needs are those needs that we have that we don’t even know we have. They lie dormant until something comes along that encourages these needs to surface. Think iPad. Human-centeredness is what separates design thinking from other innovation methodologies. It has the ability to produce radical innovation rather than incremental innovation.
The beauty of design thinking is that it works best under conditions of uncertainty—when you really don’t know where to start. It’s a methodology that is very messy in practice but does allow for a systematic approach to creating new opportunities. In my opinion, every entrepreneur is a designer.