How to Design a Business:
4 Lessons from Startups
As a designer at IDEO who focuses on building businesses, I’m always seeking inspiration from startups. How do they craft compelling offers? Eek out a competitive advantage? And how can I bring that intel to our clients and set them up for success? Last night, I attended a food tech event, “Navigating from Clicks to Mouth,” which featured well-known startups like Postmates, Hampton Creek, and Good Eggs, along with a few newer players.
Startups face many of the same challenges established companies do, so learning how they stare down those obstacles helps me work through possible risks, plan for contingencies, and find hidden pockets of value in design recommendations for clients.
Here are four insights I came away with, along with my own How Might We responses (Read about IDEO’s signature How Might We phrase in this fine HBR article).
1. A product or service’s main competitive advantage may not be in the product itself.
Postmates invested heavily in building a proprietary dispatch system that can predict not “when a courier is currently by the restaurant” but “when a courier WILL be by the restaurant at the time the order is ready.”
How might we push further on a concept’s potential competitive advantages and barriers to entry?
If I’m designing a new delivery service, for instance, I could explore how keeping the fleet low-cost and low-tech — say, using bicycles — would allow investments in other areas, like high-touch customer service or proprietary packaging.
2. There’s a human cost to prototyping in a live system.
Good Eggs recounted the challenges of trying to implement a change in their delivery system, which still isn’t entirely automated. To test one possible iteration, they may need to call the drivers, re-train the packers, and manually adjust their producer platform.
How might we make incremental change with potentially big impact less daunting to our clients?
For instance, Chipotle tested Sofritas, a vegetarian protein, in seven restaurants in San Francisco before expanding to additional locations in California, and then nationwide. Mindful of the appeal of their simple menu and fast service, Chipotle made sure that the new menu item was popular enough to justify complicating the serving process.
3. Digital services still need real people on the other end of the phone.
Doughbies underscored that no matter how much people love to order online, if something goes wrong, they want to be able to call and talk to a human.
How might we evaluate what is most valuable as digital versus analog within an offer?
If I were designing a new digital concept, I would prototype with a bare-bones version of Net Promoter Score and ask two groups of users to report an issue, providing one group with digital support, the other with a call-in number. Afterwards, I would talk to them about their experience and overall satisfaction to determine which served the business best.
4. Capturing the middle market consumer means challenging assumptions on brand positioning and marketing.
Hampton Creek shared how they decided not to market their non-egg mayo as vegetarian and opted for standard pricing, instead choosing to invest in standout packaging, because “mayo can be beautiful, too.”
How might we innovate across multiple levers of a single brand — from visual identity to pricing to marketing?
A great example can be found in Loco’l, a fast-food concept by celebrated chefs Daniel Patterson and Roy Choi, that’s innovating across its brand. Their goal is to offer fresh, chef-driven food in an environment with modern, Danish details — all at prices comparable to McDonalds.
Designing a new business is hard work, even for an established company with a ton of resources. Instead of fearing disruption from startups, companies can get ahead by studying them, the particulars of how they innovate. The best — and most delicious — design decisions are always in the details.