Design matters for business, for startups

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This is a piece I wrote for The Irish Times on 7 November 2014. Full story is at http://www.irishtimes.com/business/find-your-niche-and-put-focus-on-design-1.1991105

A report by Sir George Cox for the UK Treasury in 2005 started with definitions of three key ingredients that could enhance business competitiveness: creativity, innovation, and design.

Creativity, Cox said, is the inception of new ideas, approaches to problems or discovery of new opportunities.

Innovation is the exploitation of these ideas. It transmits new ideas to the market in improved or entirely new products, services, methods and so on.

Design is the thing that binds creativity and innovation together, giving form to new ideas.

So, innovation occurs when a company combines creativity in how it solves a problem with a considered approach to design. Take the example of Maryrose Simpson, one of the finalists for Ireland’s Best Young Entrepreneur.

Like many women, Simpson often found herself without supplies when her period came. What if, she reasoned, everything she needed could arrive at her door at the right time of the month every month? She did customer research and found a real market for the service. Continue reading

What start-ups need is proof, not passion

Prototyping at UCD Innovation Academy workshop

I wrote this article for The Irish Times. Full story is at http://www.irishtimes.com/business/what-start-ups-need-is-proof-not-passion-1.1949565.

After the dotcom bust, entrepreneurs came to realise the untested hunch was no longer adequate.

In 1999, the start-up Webvan launched in the US with the intention of becoming the grocery service for online shoppers. It climbed to a multibillion dollar valuation at its IPO in late 1999, and declared bankruptcy less than two years later.

This disaster is all the more remarkable because Webvan’s founder, Louis Borders, was an experienced entrepreneur who had built up a successful chain of book shops with his brother. He hired heavyweight management, poaching the chief executive of Andersen Consulting (now Accenture), and secured backing from Goldman Sachs and leading venture capital firms such as Sequoia and Benchmark.

But Webvan had spent massive funds in a “get big fast” strategy intended to seize a dominant piece of the market. Without having thoroughly tested its business, Webvan invested $1 billion on distribution centres. Even as Webvan was losing massive sums of money on its all-or-nothing gamble, the UK grocery giant Tesco had been cautiously testing and developing its own business delivering groceries over the internet. In 2001, the same year that Webvan folded, Tesco announced online sales of £146 million. According to Tesco’s 2014 annual report, 86 per cent of its product sales are now made online.

Data and experimentation

There were plenty of other bad bets by impetuous entrepreneurs and their investors between the mid-1990s and early 2000s, with the result that the Nasdaq’s value crashed in October 2002 to just a quarter of its peak in March 2000.

Yet herein lies a silver lining. As a result of the dotcom bust, there has been a change in outlook among tech entrepreneurs. They began to move from dogma to rationalism: where once an entrepreneur might pursue an idea on blind faith, the untested, unproven hunch was no longer adequate. Passion began to matter far less than proof.

Tech entrepreneurs have flocked to the “lean start-up” approach. They use customer relationship management systems to understand their users’ behaviour from a distance; they build sales funnels that track when customers are ready to buy and what influences them, and they carefully monitor how customers react to subtle tweaks to their services with the objective of constantly improving them. In short, they are treating business not as a vocation or a vision, but as an experiment to be tinkered with and optimised.

They are essentially doing what Feargal Quinn was doing in his shops decades ago. The Superquinn founder quickly recognised the importance of repeat custom in the grocery business. Instead of maximising profit per visit, which was the norm, he emphasised the importance of drawing customers back repeatedly.

Quinn designed his shops so that managers had nowhere to hide. There was no office where they could take phone calls or do paperwork. They could be accosted by a customer on the floor at any time. Quinn himself spent Wednesday mornings with panels of customers at Superquinn, hearing what they thought of the shop. In other words, Quinn’s managers faced the customers directly every day and, on Wednesdays, he faced them himself in the hope of finding things he could improve.

Hubris versus the prototype

In contrast, consider a far more humble entrepreneurial example. Several years ago, I co-founded a technology venture that focused on tour guide operators. The product we had conceived would radically change how tourists perceived new cities, and would also bring new marketing benefits to tour operators. We were convinced of the idea’s greatness, which is why we kept it quiet and told nobody about it.

We drew together a team to build a demonstration of the product, and kept what we were doing quiet. During a long and difficult development process, we never thought of interviewing tourists or tour operators. Our appetite for criticism was nil. So rather than build something basic and test it with users, we strove for a version that would have the maximum impact.

The venture came to naught, primarily because we were trying to build something to too high a specification, but more importantly because we had not taken the time to ask if what we were building would be relevant to the people we hoped to sell it to.

For all its current woes, Tesco’s trial-and-error approach trumped Webvan’s all-or-nothing gamble for the same reason that Feargal Quinn’s shops engaged repeat customers: incremental experimentation works. The first step towards the world’s best idea is to be willing to abandon the world’s best idea.

Johnny Ryan is executive director of the UCD Innovation Academy

Designing services for smarter business

service design masterclass

I wrote this article on service design for The Irish Times, published on 5 September 2014. Article is at http://www.irishtimes.com/business/designing-services-for-smarter-business-1.1916748

The Apple user or Nespresso drinker appreciates not only the physical good, but the entire experience of interacting with the business

A customer’s relationship with a service is often unpleasant and short. But occasionally something unexpected happens: a customer experiences something positive and valuable. A happy customer is an extraordinary thing. So extraordinary that this first moment of happiness with a service can be a prelude to a long-term, perhaps even life-long, relationship with the service provider.

Service design matters

The life-long Apple user, Volvo driver, or Nespresso drinker, appreciates not only the physical good, but the entire experience of interacting with the business that sells the good. That includes the marketing material, the place or method of purchase, the packaging of the product, the method of its delivery, the experience of using it, and so on. In other words, these businesses have taken care to plot every point in the lifetime of their relationship with the customer and consider how to make these enjoyable and perhaps valuable.

Few businesses do this. But when they do, what they are engaged in is called service design. And it is a big deal.
Three service designers, Ré Dubhthaigh, Lynsey Duncan, and Sean Miller, joined forces to run a service design master class, which was hosted at the National College of Art and Design for three days last week.
The course was so novel that several senior NCAD staff participated not as teachers, but as students. The other attendees included staff from architecture and design practices, one financial services firm, and Dublin City Council’s novel Beta Unit, among others. The masterclass set participants the big challenge: conceive and run a live service for the public within three days.
The logic was simple, says organiser Dubhthaigh. To make it work you have to leave the building. That means getting out onto the street and talking to the public. “You can only really understand value by going and doing it,” says Dubhthaigh.

Three-day challenge: launch a live service

Near the end of day one we were set a challenge: launch a new service for tourists in the Liberties area of Dublin. The team I worked on included two designers and an architect. Within three days, with no overtime, we had a minimum viable product up and running. By the end of day three we had enough feedback to set pricing and redefine the offering in such a way that we could have launched a pilot product with reasonable certainty of generating revenue. Here is how we did it.

Day 1:
We hit the streets and spoke to tourists walking toward the Guinness Storehouse, and to locals on Thomas Street. One hour’s work taught us that tourists faced a paradox. On the one hand they liked the edginess of the Liberties and wanted to experience real Dublin. On the other they were intimidated by the area and needed permission and a sense of safety to engage with it. We also learned something else. Our customers were more likely to be groups rather than individuals.

Day 2:
Our team developed a concept that reestablished the Liberties historic meaning. The area had been outside the City walls, and operated its own jurisdiction in which its people lived under different laws and rules. Things were, legally at least, different there. We used this to develop a simple concept we called “Take Liberties”, a set of note cards to guide tourist groups to a different experiences that brought them into contact with locals, off the beaten track. Each experience would have an irreverent, playful tone. And so, by the end of day two, we had an idea to test.

Day 3:
In the morning our team built a prototype of several tour cards and a container using cardboard, a colour printer, and markers. This took an hour. Then we hit the streets to get feedback. The results were exactly what we needed: first, we discovered that we were describing the product the wrong way. Tourists found our “mystery tour” idea off-putting. It needed to be something like “The ‘Real’ Dublin Challenge”, which they liked. Second, they wanted to see samples of the experiences on the outside of the box, so they knew exactly what they were getting. Third, the tourists were enthusiastic about the challenges in the tour. On average, they said they would pay €1-€2 per challenge.

Within three days this quick and dirty approach to developing a service, testing it, and refining it, had yielded a potentially strong offering for which we had a rough sense of how much people would pay and how to brand and pitch it.
As Dubhthaigh says, “Value is co-created with users.” Designing a product in isolation, without constantly asking prospective users for their feedback, is a bad idea.

Not just for start-ups

This applies to established businesses too. User feedback on rough prototypes can remove the risk of launching new products or refinements and can help to make the case that something is worth taking forward.

But there is a more profound impact of the service design approach. It puts the user/customer first. And that can mean riding rough shod over the established way of doing things. Whereas precedent, politics, or siloed thinking might prohibit an established business from doing something, putting the user first offers management a reason to reorder internal operations.

Service design based on user needs can improve efficiency, remove unnecessary blocks and connect functions within the organisation.
Only by talking to customers and understanding what they need can senior executives of a business, start-up or behemoth, know what it ought to be doing.

Sustainable growth, not disruption

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An edited version of this piece appears in The Irish Times , 1 August 2014 (online here)

In defining the criteria by which the judges of The Startup Academy will adjudicate which companies would be accepted into the programme we have done something radical. Normally a competitive process like this might select only the startups that are most likely to grow to a vast scale. In our case, however, the primary objective is not what startup incubators call “scalability”. Instead the Startup Academy’s criteria require judges to select startups that are most likely to grow sustainably.

Moving beyond disruption

In 1942 Joseph Schumpeter, an economist, described “creative destruction”, a process whereby new businesses entering a market “incessantly destroy” incumbent companies. These new entrants will themselves fall prey to later entrants who introduce new products or services that disrupt the incumbents’ businesses.

This view of disruption has been the mantra chanted in the technology sector with growing confidence from the late 1990s on, when a Harvard business theorist, Clayton Christensen, published the landmark disruption book “The Innovators Dilemma”. In Silicon Valley at least, disruption has since become dogma. Christensen’s place in the tech firmament is now so central that an attach on his research in a recent piece in The New Yorker caused a furore. None other than Marc Andreessen, the co-founder of Netscape and one of the most prominent investors in Silicon Valley, took to twitter in his defence.

The theory of disruption is one of the few things that is immune to disruption. In a more recent piece in The New Yorker Nathan Heller wrote about Francisco’s gentrification as wealthy tech employees drive up property prices and displace residents. The benefits of the startup boom are only for some, as the protestors on San Fransisco’s streets complain. The Christensen spat and the culture war currently raging in San Francisco are linked. There is something not quite right with the tech startup culture. Something that needs fixing.

We look upon disruption as a foreign concept imported from centres of innovation in the US, but there is something inherently disruptive in the Irish psyche. It surrounds us. Our cities are a mess of oddly planned clutter. Our rural landscape is a patchwork of irregular hedges. It is not possible to move in Dublin without braving the hazard of pavement hopping cyclists, swerving cars, and jaywalking pedestrians. This kind of disruption is what the Irish person lives with each day, and it supports a free-wheeling attitude to new ideas.

But there is a darker side to disruption. Entrepreneurs raised on stories of Instagram’s multi Billion dollar sale assume that to disrupt something is necessarily to the good because that which has been disrupted will be replaced by something better and more efficient. This is not always the case.

Disruption is the logic of Darwin applied to business. Natural selection, however, was intended to act for population growth rather than revenue accumulation. The winner takes all logic of disruption can be harmful.

Disrupting an inefficient industry may, for example, carry the very nasty side effect of dumping people with no hope of employment in the new dispensation on to the live register. Even so, one could argue that Schumpeterian “creative disruption” works when the benefit of what is new outweighs what has been destroyed. Yet there are certainly conditions when this test is not met.

And herein lies the question. Should we predominantly support the great disruptors, or should we support companies embarking on more modest – but sustainable – growth?

Go Lean, grow sustainably

If one could design a startup culture from scratch one might very well opt for many small, constant returns rather than few mega wins. It would drive continuous improvement that serves us all better.

For a very small business even modest growth is enough. One tailor told Stephen Brennan, the Chief Digital Advisor at the Government’s Department of Communications, that the difference between his store surviving and closing was the sale of one additional suit per month. Brennan has since bent many of his efforts toward schemes that help small businesses develop an online presence, such as the Trading Online Voucher Scheme announced earlier this year.

Opting for sustainable growth does not mean abandoning innovation. “Lean thinking” is a central tenet of startup thinking in the technology sector, and it applies as much to sustainable growth as to disruptive growth.

“Lean” describes a focus on properly understanding what a customer needs before building a product, and then constantly iterating that product to ever more perfectly meet the customer’s need. Lean was at the heart of the Toyota Production system that elevated Japanese manufacturers above American competitors in the 1980s and 90s. This iterative approach is applicable to every industry.

The better startup culture

A startup culture that embraces all sectors can also embrace more than Schumpeterian disruption. Designing a better culture for startups means minimising the hurt of disruption and maximising the spread of iterative improvement by design.

Ireland’s startup culture needs a change of mind set from winning big to winning sustainably. And as a first step The Startup Academy is looking for companies that can employ rather than creatively destroy.

Design Thinking, and thinking like a child, for product design

Students at The Innovation Academy tackle the marshmallow challenge

This is a slightly shortened piece I wrote for The Irish Times on Design Thinking in organisations. Full article is here http://www.irishtimes.com/business/bring-design-thinking-to-your-product-1.1822064

Bring design thinking to your product Thinking like a child could save your business cash

US technology investor Dave McClure coined a maxim that sums this challenge up: “Your solution is not my problem.” He had sat through many a pitch from start-ups seeking his investment before distilling this nugget. And the idea, once grasped, is obvious: entrepreneurs often produce products that do not solve the kind of problems customers actually have. An entrepreneur pitching for investment is keen to talk up their solution, but what counts, says McClure, is that there is a genuine problem to be solved in the first place.

Stages

Designing products that solve real problems is difficult. A process called “design thinking” can help a business to shape its product to meet customer needs.

The process has five stages, and begins with the “empathy” stage during which the business goes out to research the problem among the people affected by it. Using the insights discovered by talking to people, the team can progress to the “definition” stage where it defines the problem based on real needs of potential customers rather than the entrepreneurs’ Continue reading

Lean Startup Strategy. Not just for startups.

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I spoke to Steve Blank, Alex Osterwalder, and the man who coined “Lean”, John Krafcik. Here is what they said. This article appeared in The Irish Times 2 May 2014 see link.


 “U should apply Lean Start-up Strategy in everything u do. Even ur personal & love relationship. Think about it & makes sense.”

Thus tweeted an excitable San Francisco tech entrepreneur (whose Twitter profile notes that she is one of Business Insider’s 27 “most impressive Harvard MBAs”).

A sizeable proportion of the hype surrounding “lean” is overwrought, but a sound kernel of logic lies at the heart of the “lean start-up” craze sweeping entrepreneurial circles. The lean method of building start-up companies and products emphasises customer research and tactical tweaking over execution of strategic business plans.

Stanford professor Steve Blank, the father of lean start-up strategy, says the big idea of lean strategy is “stupidly simple”.

“The first thing an entrepreneur should do is get outside the building and start Continue reading

Press: “Innovation Academy UCD appoints Dr. Johnny Ryan as Executive Director”

Dublin, 8 April 2014:  The Innovation Academy, UCD, today announced that it has appointed Dr Johnny Ryan as Executive Director.  In his new role Dr. Ryan will take responsibility for the execution of the strategic mission and expansion of the Academy, and management of core operations including staff, programmes, and commercial operations. Dr. Ryan joins the Innovation Academy UCD from The Irish Times, where he held the position of Chief Innovation Officer.

Professor Suzi Jarvis, founder and Academic Director of the UCD Innovation Academy said , “The purpose of the UCD Innovation Academy is to provide a transformational educational experience for the betterment of Irish society and economy. Johnny has an excellent international reputation for innovation and flexible strategic decision-making.  We are delighted that he is joining the Academy at this critical time as we rapidly expand our entrepreneurial activities both here and abroad.”

Since joining The Irish Times in late 2011, Dr Ryan established a multi-million euro Big Data R&D program intended to give The Irish Times’ newsroom a competitive edge in delivering insight to the reader. This programme sees the newspaper work with the Insight Centre for Data Analytics, UCD, NUIG, Science Foundation Ireland, and Enterprise Ireland to push the boundaries of data science.  He also introduced tech startups inside the 156 year old newspaper to develop new digital experiments. These initiatives have since been duplicated by other media leaders around the globe.

The Editor of The Irish Times Kevin O’Sullivan paid tribute to Johnny Ryan, noting he “has had a transformative effect in changing and broadening digital thinking across our entire organisation”, and wished him well in his new role.

Dr Ryan said “In the two and a half years with The Irish Times I have had the privilege to work on, as well as lead projects that introduced radical change. I now have the opportunity to bring the incredible dynamism of the Innovation Academy to help businesses to tackle the changes needed to further provide the Irish economy with a competitive edge in the global market.”

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Notes for the Editor 

About Innovation Academy, UCD

The UCD Innovation Academy was established in 2010 to transform education on campus, and to play a leading role in the wider innovation ecosystem. Since its opening over 600 students from every discipline have participated in the Academy to develop their creativity and to apply innovative approaches to tackle real world problems. The Academy is currently working with many leading multinationals, SMEs, charities and Government agencies and recently commenced a major partnership with the GAA to ignite community entrepreneurship across the entire nation.

About Dr. Johnny Ryan

Dr Ryan’s second book “A History of the Internet and the Digital Future” is on the reading list at Harvard, Stanford, and other top tier institutions. As a thought leader on innovation his writing has appeared in Fortune, BusinessWeek, Contagious, NATO Review, ArsTechnica, and The Irish Times.

His PhD at the University of Cambridge, where he was an O’Reilly Foundation Scholar at Magdalene College, examined how terrorist memes proliferate online.

His previous research, as a Senior Researcher at the Institute of International & European Affairs, was the most cited source in the European Commission’s official impact assessment that decided against pursuing an EU-wide system of Internet censorship. He is an associate on the emerging digital environment at the Judge Business School of the University of Cambridge.

Big Data R&D for the newsroom

1956 study

US newspaper circulation To grasp the scale of the challenge that faces the newspaper industry take a look at this chart. As the red line shows, daily circulation figures in the United States have declined to levels not seen since World War 2. For an even grimmer narrative visit Paper Cuts where Erica Smith chronicles layoffs at newspapers as they occur. However, the future for the newspaper will be brighter than these things might appear to suggest.

There are two reasons to be optimistic. First, the emerging information environment suits the high-end newspaper, although that might be difficult to believe today. Second, big data in the newsroom can help deliver precisely what the reader needs. At The Irish Times we are working to develop big data capabilities in our newsroom that do exactly this.

The information environment: White Noise 

Three in every five of our users believe that they receive too much information every day in the form of news, e-mails, newsfeeds, and social media updates, according to a survey I recently ran. (Sample: just under 1,800 respondents from among users of Rewarding Times, The Irish Times’ upmarket group discount service, 94% of whom are regular Irish Times readers online or in print).

Irish Times readers tend to be adept information consumers, well-educated and well-read. So when a large proportion of them say they are receiving too much information that suggests the problem affects everyone. The crux is that information, which was once scarce, expensive, and manageable, is now the opposite: plentiful, cheap, and overwhelming. This change was apparent before I joined The Irish Times, and it has become increasingly visible since. Reuters Oxford Institute’s Digital News Report 2013 reports that as people “acquire more devices they also consume more news … but also access news more often throughout the day”. And the result is a white noise effect.

The idea of ‘information overload’  gained currency among researchers from the 1960s onward. An  example worth reading is Streufert, Suedfeld, and Driver’s studyConceptual structure, information search, and information utilizationpublished in 1965. It tracks the decisionmaking ability of 185 students as they receive increasing quantities of information, and proved that humans continue to crave information even when they have more of it than they can handle.

There is an analogy with food, put simply in Clay A. Johnson’s Information diet (2011). As dietary calories became cheap and plentiful in the West people were forced to be selective in their diet in order to maintain their health. Information, like energy in food form, is something that humans have an insatiable appetite for.

Ryan's loose theory of too much information

As the ratio between quantity of available information and our capacity to absorb it changes, we must be more selective.

The newsroom: Big Data R&D 

Although information of varying quality and provenance has become cheap, trustworthy insight is increasingly precious. The white noise creates an acute need for thoughtful analysis and verification. And the market reflects this. Publications that provide this, such as The EconomistThe New York TimesThe Financial Times, and so on, are prospering.

The lesson is that the value of insight has survived the disruption, and the reputation for trustworthiness that reputable newsrooms can attach to that insight is more valuable than ever. This is good news for The Irish Times. It is governed by a trust whose articles mandate that it exists ‘to enable readers of The Irish Times to reach informed and independent judgements and to contribute more effectively to the life of the community’. In other words, its sole reason for operating is to turn people into thinking citizens rather than to make a profit. (Profits generated through things like Rewarding Times are reinvested back into the newspaper’s mission).

Earlier this year at the annual conference of the World Association of Newspapers and News Publishers in Bangkok we told our colleagues around the world that we had begun to develop a multi-million, multi-annual, big data R&D programme focussed on radical innovation in the newsroom. Over the coming months I will post updates on this blog. You can also see video diaries of our innovation initiatives with startups (Irish Times Digital Challenge and Irish Times FUSION) at irishtimesidealab.com.

We have been working with Enterprise Ireland, Science Foundation Ireland, and with the leading computer science research centres in the country to build up a world class consortium for big data R&D. And crucially, where many organisations have made customer data the primary focus of their big data work, our focus at the outset is to find and deliver the critical insights that separate a story worth reading from just another distracting tid bit.

The Irish Times is re-discovering the spirit of invention that made it one of the first half dozen newspapers in the world to launch an online edition in 1994. We are pioneering new ways to deliver insight and cuts through the white noise. If you would like to help please get in touch.

New project: Prevent national health crises by mining public discussion and news to predict vaccination uptake

Prevent national health crises by mining public discussion and news to predict vaccination uptake

This is the proposal that I submitted yesterday to the Knight Foundation health data challenge. See the proposal, and vote on it if you like it, at the Knight News Challenge.

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Vaccines matter. We want to predict uptake by mining news and social sources. Our initial pilot in Ireland will focus on the uptake of the HPV vaccine, a critical public health issue for women in Ireland.  Continue reading