The Role of Design in Startups

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LUK IMRICH MASTER THESISTHE ROLE OF HUMAN CENTRED DESIGN IN STARTUPSIIIMASTER THESISTHE ROLE OF HUMAN CENTRED DESIGN IN STARTUPS Submitted in Partial Fulfilment of the Requirements for the Degree ofMASTER OF SCIENCE (M.SC.)BY LUK IMRICHStudent ID number: Faculty:Degree program:Primary supervisor:Secondary supervisor:Date of submission:11972Communication and EnvironmentUsability EngineeringProf. Dr. Karsten NebeProf. Dr. Ingeborg Schramm-Wlk21.08.2013VABSTRACTScope of this work contains three building blocks: Innovation, Design and Startups. By close exami-nation of these three areas, the study will help towards better understanding of startups. The most valuable finding of this project is, that Hu-man Centred Design and Lean Startup are both human centred methodologies. Thus it can be said the role of Human Centred Design is crucial in Lean Startup. The primary reason, it was concluded that Hu-man Centred Design is an integral part of start-ups. Comparison of Human Centred Design and Lean Startup illustrated that both of them share similar principles and activities, such as early fo-cus on users, empirical measurements, and itera-tive process. Another connection, is that the startups par-ticipating in this study demonstrated significant awareness of these principles and activities. Moreover, startups reported day to day usage of various Human Centred Design Methods, such as Sketching, Interviews, Prototyping, Use Cases, User Stories, User Based Evaluation, Observation. The aforementioned reasons may sound promis-ing, but two important limitations must be con-sidered. First, the research has only an indicative character due to limited resources of this thesis and highly demanding research which is needed for the context of startups. Second, profitability as a tool to measure success was not proven as assumed and therefore it was not possible to de-cide whether Human Centred Design is helpful for them or not. On the whole, this thesis showed in theory that Human Centred Design and Lean Startup share the same human centred core. This finding was reflected in research, in which startups showed significant awareness of principles and activities. Furthermore, the informants reported active use of said methods.VIIACKNOWLEDGMENTSThis thesis would not have been possible with-out the guidance and the help of several indi-viduals who in one way or another contributed and extended their valuable assistance in the preparation and completion of this thesis.First and foremost, my utmost gratitude to my teacher and supervisor, Prof. Dr. Karsten Nebe, he has taught me more than I could ever give him credit for here. He has made available his support in a number of ways. He has been al-ways approachable in his own friendly way. I am sure that this was one of the reasons why he was always able to make me think, challenge and en-rich my ideas as no one before. I would like to thank for the support and help of Prof. Dr. Ingeborg Schramm-Wlk. She, as a Dean of Communication and Environment Faculty, took time off from her extremely busy schedule to advise me and guide me. All of this with all her kindness and wisdom. Furthermore I would like to thank Andrea da Sil-va M.A. for introducing me to the topic of Busi-ness as well for the support and her deep inter-est in my thesis on the way. I cannot find words to express my gratitude support and help of Ralph Hinderberger, who helped me not only with deep insights into in-novation, he was there as a friend who helped me to deal with all complexity of the thesis.I have been fortunate to meet Vidar Andersen, who unselfishly shared his deep understanding of startup with me in several sessions. Without his help I would never been able to grab such a complex topic as startups are. Although Vidar Andersen was invaluable help, it was not only him who brought me to the world of startups. I am grateful to all of those with whom I have had the pleasure to meet and share valuable in-sights. Namely, I share the credit of my work with Salim Virani, Richard Filipovsk, Michal Maxin, Vojtch Krmek and Andrej Pank.Special thanks to the survey participants. With-out their participation and feedback, this study would not have been possible. At the same time, I owe a debt of gratitude to Tomer Sharon, Lukas Fittl, Milo Blako, Noha Nada, Monika Pastirkov for promoting my research.I would like to show my appreciation to Nina Alef who went through the whole thesis, help-ing me finding the inevitable typos, and point-ing out places which were not that clear as I thought they were. I am also greatly indebted to Kristina Moysov for her final proofreading. Both of them have profoundly improved the compo-sition of this thesis.Last but not least, nobody has been more im-portant to me in the pursuit of this thesis than the members of my family. I would like to thank my parents, whose love and guidance are with me in whatever I pursue.IXTABLE OF CONTENTS INTRODUCTION 1LITERATURE REVIEW AND THEORETICAL FOCUS 5INNOVATION 7 LEAN STARTUP 12 DESIGN 20 LITERATURE FINDINGS 25RESEARCH 31METHOD 35 PROCEDURES 37FINDINGS 39RESULTS 40 DISCUSSION 48CONCLUSIONS 51HUMAN CENTRED DESIGN AND LEAN STARTUP METHODOLOGY 53 THE ROLE OF DESIGN IN STARTUPS 54APPENDIX 57 APPENDIX A 59 APPENDIX B 61REFERENCES 68XILIST OF FIGURES Figure 1 The Disruptive Innovation Model 8Figure 2 Two Types of Disruptive Innovations 9Figure 3 The Business Model Canvas 14Figure 4 Customer Development Process 16Figure 5 The Customer Development Insight Cycle 17Figure 6 The Wheel lifecycle 22Figure 7 Interaction design lifecycle model 22Figure 8 Human Centred Design activities 23Figure 9 Comparison of Human Centred Design and Lean Startup principles 25Figure 10 Customer Development Process 26Figure 11 The Customer Development Insight Cycle 27Figure 12 Human Centred Design activities 27Figure 13 The hill-climbing paradigm applied to incremental and radical innovation 29Figure 14 Distribution of participants 34Figure 15 Age of startups expressed in spent months 34Figure 16 Motivation of startups by their success 46Figure 17 Motivation of startups in the very beginning 47Figure 18 Motivation of startups at the moment of answering 47Figure 19 Endorsement of focus on users, their tasks, context of use 48Figure 20 Endorsement of focus on meeting user requirements and produced design solu-tions 49Figure 21 Endorsement of focus on evaluation the designs against requirements 50Figure 22 The most used methods on a regular basis 51Figure 23 Methods that startups never heard of 51Figure 24 The most abandoned methods 52Figure 25 Known yet not used methods 52Figure 26 Attitude towards innovation 53Figure 27 Monetization of users 53Figure 28 Customer Development Process 59Figure 29 The Customer Development Insight Cycle 59Figure 30 Landing page 60Figure 31 The Questionnaire examining the role of human centred design in startups 61INTRODUCTION Hello, my name is Luk Imrich and this is my master thesisabout the role of design in startups. Please Enjoy.INTRODUCTION3REASONS BEHIND RESEARCHThe Role of Human Centred Design in Startups is the topic that Luk Imrich chose as his mas-ter thesis. There were several reasons that lead Luk Imrich to believe that this topic is worth-while studying. The primary reason, Luk Imrich noticed simi-larity between principles of Human Centred Design and principles of Lean Startup Method-ology. Back then it was a superficial observation, which turned to be true in many aspects as it is argued later. Another intrinsically linked reason, discovered only through the reasearch, is that Lean Startup does not only share same principles with Hu-man Centred Design but as well with innovation itself. This is supported by many ideas of Peter F. Drucker, more recently Clayton Christensen, both of them are touching problem of human needs. At this point a problem of different roles of peo-ple in mentioned theories emerged. On one hand Human Centred Design is talking about users, on the other hand Lean Startup and in-novation theories are more specific and talking about customers. For the purpose of this work it was decided that users and customers are used interchangeably. Such decision was based on assumption that startups in general monetize people directly. It is also important to mention that startups are very occasionally subject of academic re-search. This caused as reported in (Bhide, 2000) due their short life span, almost non existing documentation and small size, which means that data are rarely publicly available. Therefore literature review was time demanding, since there were barely any direct references. Fortu-nately, many corresponding academic theories were discovered, and linked to the Lean Startup Methodology. In summary, this thesis is discovering touch-points across areas of innovation, design and starting new businesses. Such knowledge is crucial to crucial understand the role of Human Centred design in startups better.TARGET GROUPThere are two distinct categories that might benefit from this work. Firstly, academics who are interested in startups and are looking for an basic overview. Specifi-cally for them, all key principles of Lean Startup were examined and backed with facts from the academic world. Secondly, first time entrepreneurs willing to learn more about Human Centred Design. In this case, it is demonstrated that Human Centred Design is integral or even key part of Lean Start-up Methodology. Thanks to maturity of Human Centred Design, already being described in ISO 9241 standard, there are indications that deeper understanding of Human Centred Design can help starting businesses. In conclusion, there are interestingly two con-trasting target groups that could benefit from this work. However such focus brought another challenge in communication, which greatly dif-fers for both audiences.PERSONAL MOTIVATIONLuk Imrich has occasionally worked with startups and liked their authentic just do it ap-proach. At the same time he is interested in his studies, and once he noticed above mentioned similarities, he could not get rid of thinking, how to apply the knowledge he was schooled to such an unstructured environment as startups are.STRUCTURE OF THE WORKIn order to understand startups, knowledge of innovation principles is required. Only then it is possible to explain and describe the differences and similarities between Lean Startup and Hu-man Centred Design as explained in literature overview.Research part is focusing on answering the key discoveries by using questionnaire analysis. Fi-nally, all findings are summarized in Conclusion.RELATED LITERATURE AND THEORETICAL FOCUS INNOVATION | LEAN STARTUP | DESIGN | LITERATURE FINDINGSRELATED LITERATURE AND THEORETICAL FOCUS | INNOVATION7INNOVATIONUNCERTAINTY AND DISRUPTING INNOVATIONSAlthough innovation is not directly mentioned in the title, it is one of the key topics of this the-sis. Explanation of innovation as presented in this thesis guides later understanding of start-ups. To unveil topic of innovation it is important to understand why there is above mentioned connection with startups. Startups in detail are elaborated later, for now it is enough to refer to: (Ries, 2011) A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty. (p. 8)Regarding to the definitions there is a certain level of uncertainty. What is the cause of it?(Cooper and Vlaskovits, 2013) suggest: Uncertainty and innovation are a duality. Without the former, there is no opportunity for the latter. (Kindle Locations 422-425)However, innovation is a vastly broad term, it is needed to agree on a definition. Interestingly such definition can be found in the over one hundred years old defined concept of innova-tion formulated by Joseph Schumpeter:(Ohsawa and Nishihara, 2012) the introduction of new goods, new methods of production, the opening of new markets, the conquest of new sources of supply, and the carrying out of a new organization of any industry. (p.1) Joseph Schumpeter 1912/1934This definition perfectly works even nowadays, however for the purpose of this work it is needed to be more concrete, therefore the Disruption Theory is analysed. It specifically examines inno-vation with technological core. Such focus per-fectly suits startups, since the internet as a tech-nology is a must for the vast majority of them. On top of that Steve Blank, one of the most influ-ential startup evangelist and practitioner (Blank, 2013) admits inspiration by thinkers such as Clay-ton Christensen, Peter F. Drucker, which only sup-ports the idea of startups linked with innovation.DISRUPTION THEORYChristensen identified two major kinds of inno-vations, sustaining and disruptive innovation. For the purpose of this thesis, only the concept of disruptive innovation is considered impor-tant. Therefore, the concept is discussed in detail describing low end and new market disruptive innovations.Sustaining Innovation(Christensen, 1997) Sustaining Innovation is fo-cused on existing customers who make a com-pany profitable by providing with better perfor-mance of already existing products. This way the company can sell those products with higher profits. Interestingly, it does not matter, whether the improvement was made incrementally, step-by-step or radically, with a breakthrough. It is im-portant to note that the improvement was made to serve already existing, demanding customers.Disruptive Innovation (Christensen, 1997) Disruptive innovation, on the contrary does not target high-end custom-ers in already existing markets. Offered products do not need to be even as good as competitive products. However, they are usually either less expensive or simpler or good enough to provide functionality that was not available previously. Disruptive innovation targets new or less-de-manding customers.Therefore, in already existing markets new en-trants are not perceived as a threat, since they are targeting less profitable customers. In new markets, there is no competition. Ultimately, new entrants can improve and thus move up the market and target high end customers.LOW-END DISRUPTION Christensen (Christensen, 1997) identified the following critical elements of disruption:(Bhide, 2000) Uncertainty refers, per Frank Knights 1921 definition, to unmeas-urable and unquantifiable risk. (p. 30) Amar BhidRELATED LITERATURE AND THEORETICAL FOCUS | INNOVATIONValue Networks and Business Models (Christensen and Raynor, 2003) Within the di-mensions of time and performance is defined a particular market application in which custom-ers purchase and use a product or service. This application and set of customers Christensen calls a value network. (p. 43)(Christensen and Raynor, 2003) A value network is the context within which a firm establishes a cost structure and operating processes and works with suppliers and channel partners in order to respond profitably to the common needs of a class of customers. (p. 44)In other words a value network is a business model in a broader context, including the class of customers, competitive strategy, choices of markets, the perception of the economic value of a new technology, suppliers and channel partners.Accordingly to Christensen (Harvard, 2013), business model is designed not to change but to deliver specific profit formula reliably and re-peatedly. Companies striving to make better products for high-end customers(Christensen and Raynor, 2003) Since the very nature of companies is being profitable, they are continuously improving their products in order to make them more attractive for more solvent users. Therefore a company, which is currently satisfying the needs of their mainstream cus-tomers, will very likely over serve them in the future. The rate of technological progress is al-most always higher than the ability of customers to use this technology. This rate of improvement is illustrated by two solid lines in the Figure 1. (p. 34)The ability of customers to absorb upcoming features(Christensen and Raynor, 2003) In every market there is a certain level of technological improve-ment that can be utilized by customers. This is represented by dashed line. To simplify model, the ability of customers to absorb features is represented by one line, however in reality there are many different lines, representing different kinds of users with different demands and abili-ties to use. (p. 34)Figure 1: The Disruptive Innovation ModelDisruptive TechnologiesPerformance that customerscan utilize or supportSustaining innovationsPace of technological progressTIMEPERFORMANCE9(Christensen 2013a) Customers in the highest levels are never fully satisfied with currently available product, in contrast to customers in the lowest levels, who may be over satisfied with very little. Generally, the dashed line represents level of technology that is good enough for the mainstream customers. The level that is already solving their needs. Summary (Christensen 2013a) Low-end disruption starts from the bottom of the original value network introducing low-cost products or services that attract an established companys low-end (the least profitable) and over-served customers. The low-end disrupting company is offering less features for less money. Proposed solutions are still good enough to fulfil the needs of less demanding customers. As Christensen says, leading companies usually rather flee from a fight, since new entrants target their less demanding and less paying customers. (Christensen 2013a) A nice example is how Toy-ota disrupted General Motors and Ford. At their very beginnings Toyota did not enter the market with a car like the high-end Lexus. Instead in the 1960s Toyota came in at the bottom of the car`s market with a very cheap simple sub-compact car called Corona. They later developed the Tercel, followed by the Corolla, the Camry, the Avalon, a 4Runner and eventually they came up with the Lexus. NEW MARKET DISRUPTIONNon Consumption(Christensen and Raynor, 2003) Christensen strengthened his previous model by adding an axis representing non-consumers. Non-consum-ers are potential new consumers; consumers who have not yet discovered an accessible so-lution for their need. Respectively, these could be customers who previously lacked the money or skills to buy and use the product. These cus-tomers are usually attracted by improvements in simplicity, portability, and product cost.(Christensen and Raynor, 2003) Ultimately, the third axis represents new customers and new contexts for consumption - new value networks. For each of these new value networks, a vertical axis can be drawn showing a products perfor-Figure 2: Two Types of Disruptive InnovationsTIMEPERFORMANCETIMEDIFFERENT MEASUREOF PERFORMANCENon-consumers or Non-consuming occasionsNew-market disruptioncompete against non-consumptionLow-end disruptionaddress over-served customerswith a lower-cost business modelSustaining strategy:Bring a better product into an established marketRELATED LITERATURE AND THEORETICAL FOCUS | INNOVATIONmance within its context. Each new value net-work has its own performance measure. In the model a new value network on the third axis cre-ates an opportunity for new-market disruptions. Summary(Christensen and Raynor, 2003) As far as low-end disruptions compete unnoticed with the leaders of their value networks, new-market disruptions compete with non-consumption, since the only obstacle to overcome is the willingness of non-consumers to buy a product. This is achieved by offering much more affordable, simpler prod-ucts that enable a whole new population of non-consumers to own or use the product or service. Hence, new market disruption is con-tinuously competing with non-consumption, meanwhile improving the performance meas-ure and attracting low demanding users from other value networks. Christensen summarizes new-market disruption as: (Christensen and Raynor, 2003) Although new-market disruptions initially compete against non-consumption in their unique value network, as their performance improves they ultimately become good enough to pull customers out of the original value network into the new one, starting with the least-demanding tier. (p 43)(Christensen and Aaron et al., 2001) Christensen provides the personal computer as an example of a new market disruption. When Apple en-tered the computer market, its simple computer product the Apple II, was far too basic to meet needs of corporate users. The Apple II could be sold only as a childrens toy. As a matter of fact the Apple II targeted whole new audiances.However, as the personal computer improved, the pc allowed people to compute conveni-ently for themselves and as a result pulled new users into the computer market by millions. The disruption led to the demise of previously suc-cessful minicomputer manufacturers, who were unable to adapt to the new conditions. (p. 47)THE WAY OF A DISRUPTIVE INNOVATOR(Harvard, 2013) To sum it up, sustaining innova-tion is aimed at making good products or ser-vices even better, so it is possible to sell a better product to high end customers for more money. This happens due to an existing business model that is already a proven and successful way to be profitable. The leaders are almost always in fa-vor of sustaining innovation and they rather flee than fight disruptive innovation. In contrast, disruptive innovation transforms something that used to be complicated to use or expensive to buy into something more accessi-ble. So a whole new population can make use of the product or service, whereas before only rich people or people with the necessary skills might have had access to it. Most of all, disruptive inno-vation operates in a new business model. Com-petitors underestimate the potential of new markets and they usually ignore new entrants. In other words, disruptive innovation comes from different customers, a different profit formula and different ways of addressing the need of customers than in mainstream value networks. As mentioned before, disruptive innovation faces two major problems. Firstly, it is very un-likely that disruptive innovation will emerge within the existing business model. Secondly, it is needed to have a deep understanding of peo-ples needs.Separated team (Christensen and Overdorf, 2000) Christensen and Ovedorf give some recommendations to deal with these problems. In order to overcome fixation within the existing business model, they recommend that a new, separated team with ex-ecutive privileges should be formed. Jobs to be done (Christensen and Anthony et al., 2007) Chris-tensen also addresses the problem of peoples needs. He is interested in what really makes peo-ple buy products. He argues that typical market-ing characteristics like demographic segments, age, kids, marital status and so on might corre-(Drucker, 2001) It is always with non-customers that basic changes begin and become significant. At least half of the important new technologies that have transformed an industry in the past fifty years came from outside the industry itself. (p. 121123). Peter F. Drucker11late with buying products or services. However, those characteristics do not result in a purchase directly. The products or services are hired to get certain jobs done. In this context the term job is a fundamental problem a customer needs to resolve in a given situation. (p. 3)(Christensen and Raynor, 2003) Using the jobs-to-be done lens: In other words knowing what job a product gets hired for and knowing what jobs out there are not getting done the job very well (available products that are too expensive or too complicated) can help innova-tors to enter a market with an initial product that is much closer to what customers ultimately dis-cover that they value.Furthermore, Christensen (Christensen, 2012) advices to find out about the products that get the job done by observing people, what they are trying to achieve and to ask them about it. (p. 3-4)(Christensen and Anthony et al., 2007) This is illustrated in the following example, in which a fast-food restaurant decided to improve the sales of its milkshakes. Firstly, they segmented the market by the product, then they segment-ed it further by profiling the customer who was most likely to buy the product. Next they in-vited the people following this segmentation. They asked about the product qualities such as thickness, chocolateness and price. Based on the answers they improved the milkshake. As a result, there was no impact on sales. Then a new researcher spent a day in a restaurant observ-ing when milkshakes were bought, what other products customer purchased and whether they were alone or with a group. Then the researcher interviewed the customer and asked about what he saw. (p. 3-4)(Christensen and Anthony et al., 2007) Ultimately the restaurant found out, which jobs the cus-tomers were trying to achieve. One of the Job-to-be done in this case was dealing with a boring-commute job. Therefore, the costumers wanted to have even thicker milkshakes, so it would take longer to drink it. Thanks to this the commuters could spend more time drinking a milkshake and being entertained for a longer time period. (p. 3-4)SummaryIn conclusion, Christensen recommends to es-tablish separate team with executive privileges to overcome fixation on already existing busi-ness model. Furthermore, Christensen is talking about the Job-to-be done technique in order to foster innovation based on a deep under-standing of peoples needs. RELATED LITERATURE AND THEORETICAL FOCUS | LEAN STARTUPLEAN STARTUPRATIONALES BEHIND LEAN STARTUPIn the previous chapter, it was shown that dis-ruptive innovation is not likely to happen in an already existing business model. Therefore, uncertainty and innovation are tightly con-nected. As a result, conventional management techniques designed for executing the already known business model are not working. This is well summarized in:(Cooper and Vlaskovits, 2013) True disruptive innova-tion can only occur in environments in which the final product, and its value proposition, price, marketing, sales channels, and, most importantly, its customer are, at best, educated guesses but, more than likely, almost completely unknown. (Kindle Locations 1277-1279). High levels of uncertainty call for different plan-ning methods. Mcgrath and Macmillan sug-gested an alternative called Discovery-Driven Planning. (Gunther Mcgrath, 2010). Discovery driven planning processes demand that business model assumptions are both articulated and tested. (p. 258) (Mcgrath and Macmillan, 1995). The Discovery-Driven Planning identifies that under uncertain market conditions, very few facts are available and a lot is only assumed. Instead of taking those assumptions for facts, this approach treats assumptions as hypotheses. Then, by testing as-sumptions with minimal costs and as early as possible the process actually converts them into facts. Consequently, only the facts are used to take further actions. In other words, conventional planning methods are optimized to deal with executions risks, on the contrary discovery driven planning is de-signed for dealing with the mentioned market uncertainty. One of the advantages of using this approach is the possibility to experiment with various business model concepts before any in-vestment is made.This finding was supported by extensive re-search done by Bhide (Bhide, 2000), who claims that high uncertainty and limited planning of-ten force entrepreneurs to modify or completely rework the original business idea. He reported that more than one-third of the Inc. 500 found-ers he interviewed significantly altered their ini-tial concepts and another third reported moder-ate changes. (Drucker, 1985) Similarly Peter F. Drucker noted that when a new business does succeed, in most cases originally intended market, offered prod-ucts or services are not quite those with which it started. Thus, later customers bought in large final product, for a variety of purposes besides the ones for which the products were first de-signed.To sum up, it was shown that Christensens dis-ruptive innovation is not very likely to occur in already established companies within an exist-ing business model, (Bhide, 2000). According to Bhide and Drucker (Bhide, 2000), (Drucker, 1985) the business model is evolving as the new venture develops and in most cases it is differ-ent from what had been envisioned in the be-ginning. The unknown business model is being developed under the conditions of uncertainty (Cooper and Vlaskovits, 2013) therefore a new management approach embracing the change is needed. Furthermore Christensen recom-mends (Christensen and Overdorf, 2000) to cre-ate a separated team with executive privileges and follow (Christensen and Raynor, 2003) Jobs to be done- theory to foster innovation. Lean startups, as it will be demonstrated, make use of all the mentioned ideas. LEAN STARTUP Authors of book like (Blank and Dorf 2012), (Ries, 2011), (Maurya, 2012), (Cooper and Vlaskovits, 2013) are part of a movement promoting a new methodology for launching companies, called the lean start-up. This movement is the answer 13to not always functioning big up-front decisions in the context of innovation. (Blank, 2013) Blank explains that originally, founders of a business would write a business plan and attach a five-year forecast. They would raise money, and then operate in stealth mode to develop their idea, without having much feedback from the intended customers. (p. 5)(Blank, 2013) Lean startups, in contrast, start with searching for a business model. Founders themselves make, test and evaluate hypotheses, continuously gather customer feedback and iterate their products. Thanks to this approach, it is much more likely, that startups will build a product that people want and pay for. (p. 5)The most important definitions discovered through the literature review were articulated by Blank and Ries. Blank emphasizes above mentioned need for searching a working business model.(Blank and Dorf 2012) a startup is an organization formed to search for a repeatable and scalable business model.Another definition comes from Ries, former stu-dent of Blank, Ries the author whose book (Ries, 2011) started global discussion and created com-mon language for processes and methods used in startups. This definition is stressing aspect of uncertainty. (Ries, 2011) A startup is a human institution designed to create a new product/service under conditions of extreme uncertainty. (p. 8)Above stated approaches of Eric Ries and Steve Blank were combined in Startup (Marmer and Dogrultan et al., 2012) definition. The definition is quite complex yet concrete and distinguishes between different stages of startups. Startups are temporary organizations designed to scale into large companies. Early stage startups are designed to search for product/market fit under conditions of extreme uncertainty. Late stage startups are designed to search for a repeatable and scalable business model and then scale into large companies designed to execute under conditions of high certainty.Additionally Steve Blank formulated three key principles for the lean startup:Sketch Out Your Hypotheses (Blank, 2013) Instead of spending months by planning and research, entrepreneurs accept that all they need in the beginning is only a series of untested hypotheses. So, rather than writing a detailed business plan, founders sum-marize their hypotheses in a framework called a business model canvas a one page diagram on how a company creates value for itself and its customers. (p. 5)Listen to Customers(Blank, 2013) Lean startups use a get out of the building-strategy, in other words customer de-velopment, to test their hypotheses. Essentially, founders go out and ask potential customers, users or partners for feedback on all elements of the business model. Based on this, they de-velop a minimum viable product, with emphasis on speed to be able to immediately initiate fur-ther customer feedback. Then, using customers input to revise the assumptions they enter the feedback loop again and again. This time testing redesigned offerings with either, small chang-es, iterations or major changes in the business model, called pivots. (p. 5)Quick, Responsive Development. (Blank, 2013) Lean startups practice agile devel-opment, which has its origins in the software industry. Agile development complements customer development. Unlike linear water-fall development that deals with clearly stated problems, agile development eliminates wasted time and resources by developing the product iteratively and incrementally based on continu-ous customer input. This is the process by which startups create the minimum viable products they test. (p. 5-6)(Drucker, 1998)With the coming of the computer this feedback element will become even more impor-tant, for the decision maker will in all likelihood be even further removed from the scene of action. Unless he or she accepts, as a matter of course, that he or she had better go out and look at the scene of action, he or she will be increasingly divorced from reality. (p . 31) Peter F Drucker (Bhide, 2000):Entrepre-neurs start with a set of tentative hypotheses. Then, as the venture unfolds, entrepreneurs revise their hypotheses rapidly through a series of experiments and adaptive responses to unforeseen problems and opportunities.(p. 61) Amar BhidRELATED LITERATURE AND THEORETICAL FOCUS | LEAN STARTUPSKETCH OUT YOUR HYPOTHESES(Osterwalder and Pigneur, 2010) A business model describes the rationale of how an organization creates, delivers, and captures value.(Kindle Locations 226-228)(Blank, 2013) In the conventional process, a founder should firstly create a business plan, which is a static document describing the op-portunity, the problem to be solved, and the solution that the new venture will provide. It is assumed that it is possible to calculate most of the unknowns of the business in advance be-fore raising money and executing the idea. (p. 5)(Blank and Dorf 2012) Only after building and launching the product does the venture get substantial feedback from customers (Kindle Lo-cations 848-851)On the contrary, the Lean Startup uses a whole different process, which emphasizes on the search for a business model. Such search usually contains many adjustments to a business model until the final version is discovered. Firstly, it is needed to provide a simple shared language that enables cooperation and ques-tioning the status quo. Such a tool is Business Model Generation presented by Osterwalder and Pigneur. (Osterwalder and Pigneur, 2010) This business model is a tool to ensure common understanding. While being simple, relevant and intuitively understandable, it is capturing all complexities of how a organization works. As the result the Business Model Canvas is the starting point for any good discussion, meet-ing or workshop on business model innovation. Thus, this concept offers a shared language that allows easily describing and manipulating busi-ness models to create new alternatives. (Kindle Locations 229-232)Secondly, (Blank and Dorf 2012) The business model canvas as a static picture of the business at a certain moment is not enough, therefore the Lean Startup uses the Business Model Can-vas to track progress in searching for a business model. (Kindle Locations 1217-1219)(Blank and Dorf 2012) recommends to think of the first version of the Business Model Canvas as Figure 3: The Business Model Canvas adapted from (Osterwalder and Pigneur, 2010) (Kindle Loca-tions 610-611).(Blank and Dorf 2012) No business plan survives first contact with customers so use a business model canvas(Kindle Locations 847-848). Steve BlankRevenue StreamsChannelsCustomerRelationshipsCustomer SegmentsValuePropositionsKey ActivitiesKey PartnersKey ResourcesCost Structure(Osterwalder and Pigneur, 2010)Without such a shared language it is dif-ficult to systematically chal-lenge assumptions about ones business model and innovate successfully.(Kindle Locations 236-238)15the starting point showing the hypotheses that must be validated with customers. He argues that using the business model canvas as a guide makes it easier to figure out where and how to pivot (major change to business model), since the team has, thanks to the business model can-vas, a shared language and can see what needs to be changed. Each time the founders iterate or pivot in response to customer feedback, a new canvas is drawn reflecting the feedback. Over time, this process forms a flip book that shows the evolution of the business model. (Kindle Lo-cations 867-876)(Blank and Dorf 2012), (Osterwalder and Pigneur, 2010) A business model describes the flow be-tween key components of the company:1. Customer segments who you aim to reach and serve. 2. Value propositions products that create value for specific segments. 3. Channels how you communicate with and reach the segments to deliver a Value Proposition. 4. Customer relationships types of relationships with customers; for example, direct and personal, indirect, automated, and so forth. 5. Revenue streams the cash a company generates from each Segment 6. Key resources most important assets (physical, financial, intellectual, and human) required to make a business model work 7. Key activities the most important things a company must do 8. Key partnerships suppliers and partners that com-plete the model. 9. Cost structure all costs incurred to operate a busi-ness model(Cooper and Vlaskovits, 2013) Cooper and Vlask-ovits provide an example of segment-centric thinking on business model, in which the seg-ment (customers) determines the preferred method of payment and their relationship (way how customers would like to interact with the business). Furthermore specific segments determine sales channel (how much customers are willing to pay), what type of solutions they require and, therefore, cost structure of the busi-ness, as well as key partnerships and activities, and resources required to serve the chosen seg-ment. (Kindle Locations 2163-2169)Finally, as (Blank and Dorf 2012) argue, misun-derstandings or just getting the wrong key as-sumptions about your business model are quite common. In the following are some points that are often misunderstood: who your customers are, what problems they need to solve, what features would solve these problems, how many customers would pay to solve them, etc. Pivots are a response to these wrong assumptions. (Kindle Locations 706-712)PivotsPivoting is the key tool to react to those parts of a business model that were based on wrong assumptions. Pivoting is essential to the lean startup model as it significantly adds to start-ups ability to search by exploring various ver-sion of business models. As a matter of fact, the importance of pivots is reflected by numerous definitions in literature:(Ries, 2011) a structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth. (p. 149)(Cooper and Vlaskovits, 2013) To keep one foot firmly planted in one fundamental aspect of your business model, while changing other aspects. (Kindle Locations 2136-2137):(Blank and Dorf 2012) A pivot is a major change to one of the nine business model hypotheses based on learn-ing from customer feedback. (Kindle Location 710)(Maurya, 2012)Pivots are about finding a plan that works. (p. 9)LISTEN TO CUSTOMERS (GET OUT OF THE BUILDING)This is defintely the most discussed and empha-sized principle across the reviewed literature (Blank and Dorf 2012), (Blank and Dorf 2013) , (Ries, 2011), (Maurya, 2012), (Cooper and Vlasko-vits, 2013). Listen to customer part is divided into two sections. Firstly the term lean is intro-duced, as a tool to make searching for a busi-ness model as effective and efficient as possi-(Bhide, 2000) Changes in the nature of opportuni-ties lead to changes in the problems entrepreneurs face and the tasks they must perform. The founders of new businesses, who face significant capital con-straints and great uncer-tainty, rely on opportunistic adaptation to unexpected events. (p. 12) Amar BhidRELATED LITERATURE AND THEORETICAL FOCUS | LEAN STARTUPble. Then, the Customer Development Process is presented, in which listen to customer is the central activity. Lean PrinciplesListening to customer is connected with lean principles and is literally part of Lean startup.(Womack and Jones, 2003) Lean principles were developed in the early seventies by Toyota in Japan. The idea behind is to make the produc-tion process more efficient by reducing any sort of waste in the process while coming closer to providing customer exactly with what they want. (Womack and Jones, 2003) Waste is described as any human activity which absorbs resources but creates no value. (p. 15)Ries points out correctly that a lean startup sig-nificantly differs from the manufacturing envi-ronment of Toyota. In a startup, who the cus-tomer is and what the customer finds valuable are unknown. Therefore Ries redefined value as an activity which produces learning, in particu-lar validated learning.As will be demonstrated such thinking is central to customer development and is the main rea-son behind running experiments.(Ries, 2011) Validated learning is the process of demon-strating empirically that a team has discovered valuable truths about a startups present and future business prospects. (p. 38)Customer development(Blank and Dorf 2012) A startup seeks - in particular their founders - to test a series of hypotheses about a business model: who the customers are, what the product features should be and how this scales into a successful company. Customer Development embraces that a startup is a temporary organization built to search for answers. In fact Blanks argues that, (Blank and Dorf 2012) Customer Development is the process to organize that search.(Kindle Locations 319-320)(Blank and Dorf 2012) Furthermore, according to Blank and Dorf the difference between winners and losers is to understand the needs of a po-tential customer. They explain that the founders should get out of the building and strive for get-ting an in-depth knowledge of their potential customers needs. This should be done before concentrating on a specific path and precise product specifications. (Kindle Locations 254-257)All of this is summarized in the Customer Devel-opment Process (figure 4, see reprinted version in Appendix A, figure 28), (Blank and Dorf 2012) that works as followed: Firstly, during customer discovery the founders vision is captured and turned into a series of business model hypoth-eses. Then the hypotheses are being tested by customers and some of them are validated as facts. (Kindle Location 699)(Blank and Dorf 2012) Customer validation tests whether the resulting business model is repeat-able and scalable. If it is not, customer discovery takes place again. (Kindle Location 699)(Cooper and Vlaskovits, 2013) There might be the need of a pivot in the phase of customer val-idation if the founders discover that their busi-ness model is not working. Instead of starting from scratch, they keep one fundamental aspect Figure 4: Customer Devel-opment Process adapted from (Blank and Dorf 2012) (Kindle Location 665).Customer Discovery Customer Validation Customer Creation Company BuildingPivotSEARCH EXECUTION(Drucker, 2002)Most inno-vations, however, especially the successful ones, result from a conscious, purpose-ful search for innovation opportunities... (p. 7) Peter F Drucker17of their business model, while changing other aspects. (Kindle Locations 2136-2137). (Blank and Dorf 2012) Customer creation is the start of execution. It builds user demand and it uses the sales channel to scale the business. Fi-nally, company-building transforms the organi-zation from a startup to an established company focused on executing a validated model. (Kindle Location 699)Hypothesis testing in detailIt should be already clear that customer devel-opment is the process to organize the search of startups. The word hypothesis was already mentioned several times. It is not a coincidence since hypotheses - in a broader sense experi-ments or tests - are a core part of customer development (figure 5, see reprinted version in Appendix A, figure 29). This is emphasized across various books (Blank and Dorf 2012), (Maurya, 2012), (Cooper and Vlaskovits, 2013),(Gothelf and Seiden, 2013). Firstly Ries recognizes a startups efforts as ex-periments, which follow a scientific method. (Ries, 2011) Just as scientific experimentation is in-formed by theory, startup experimentation is guided by the startups vision. (p. 56-57). (Maurya, 2012) Maurya claims as well that the startup methodology is rooted in the scientific method (p. 62). (Cooper and Vlaskovits, 2013) Cooper and Vlaskovits compare and recom-mend, that entrepreneurs should run experi-ments such as scientists do. (Kindle Location 3707). Although, (Blank and Dorf 2012) is not di-rectly writing about the scientific method, he is following a very similar way compared to other approaches, that consists of stating hypotheses and designing appropriate experiments - pass/fail tests. (Kindle Locations 884-885) It is interesting that already Bhide (Bhide, 2000) drew similar conclusions, long before the lean startup movement. On the contrary, called those experiments rather entrepreneurs experiments, since as he argues they have little in common with scientific experiments and empirical meth-ods. (Bhide, 2000) points out that well designed scientific experiments are informed by a general theory. However as he later explains, entrepre-neurs have little interest in validating general truths or principles. (p. 66)To sum up, based on the reviewed literature the lean startup approach recommends to start with hypotheses. The need of hypotheses is accurate-ly described by (Cooper and Vlaskovits, 2013) A baseline or a hypoth-esis allows us to create some sort of an experiment to determine how reality compares to our guess. Without the baseline, we are more likely to shape what we experi-ence to match what we believed before the experience. (Kindle Locations 860-862). The Business Model Canvas helps to organize Design ExperimentHypothesesInsightTestFigure 5: The Customer Development Insight Cycle adapted from (Blank and Dorf 2012) (Kindle Location 888)(Drucker, 2002)Then they [Innovators] go out and look at potential users to study their expectations, their values, and their needs. (p. 9) Peter F DruckerRELATED LITERATURE AND THEORETICAL FOCUS | LEAN STARTUPsuch hypotheses and keep track of them. Once the hypotheses are stated its time to validate them through experiments - pass/fail tests. In other words, experiments are designed to trans-form implicit into explicit understanding of cus-tomers, therefore customers or end users play a vital role in these tests. Finally, based on this validated learning the founders have to decide to either proceed and start building a company (customer creation, company building phase) or to pivot (change business model).QUICK, RESPONSIVE DEVELOPMENT (Blank and Dorf 2012) Pair Customer Development with Agile Development (Kindle Location 808)Although, authors in all reviewed literature (Blank and Dorf 2012), (Ries, 2011), (Maurya, 2012), (Cooper and Vlaskovits, 2013) agree that agile development is a core part of Lean Start-up, only (Blank and Dorf 2012) and partly (Ries, 2011) provide some details. (Blank, 2013), (Blank and Dorf 2012) S. Blank points out that traditional product develop-ment, in which each stage occurs in linear order and lasts for months, will be deaf, dumb and blind to customer input except during a short period when it is specifying the product. The rest of the time, engineers are locked into an imple-mentation cycle, unable to change the product features without significant delay. In contrast the customer development process provides the continuous customer input and such a delay makes customer development not just inefficient but most likely useless. Therefore it is needed, before the company starts, that the founders must commit to the customer -agile development partnership. This way it is possible to build products in short, repeated cycles, tak-ing into consideration customers input. Furthermore, the need of agile development is stressed when a startup produces a first mini-mum viable version minimum viable product. This version contains only critical features, in or-der to solve the customers problem and gathers further feedback. Then a startup starts over with a revised minimum viable product and incorpo-rated feedback.Ries, as a software engineer familiar with agile methods, similarly illustrates practical applica-tions of using agile methods. (Ries, 2011) He argues that for continuous development, as a technique not to ship fifty times per day but rather to reduce the batch size in order to get feedback from customers faster and as a result to be able to learn faster from customers is the essential competitive advantage that startups must possess. (p.192-193) There is another tightly connected term with being quick and responsive and is heavily pro-moted in the reviewed literature:Minimum Viable Product (MVP)The term minimum viable product (MVP) was popularized by Ries, since then various under-standings appeared and it seems there is no common understanding among authors.(Ries, 2011) MVP is designed not just to answer product design or technical questions. Its goal is to test funda-mental business hypotheses. (p94)(Cooper and Vlaskovits, 2013) explain the origi-nal definition as the minimum functionality nec-essary to be viable in the product, as evidenced by the willingness of customers to pay. (Kindle Locations 3727-3728)Blank is more benevolent and counts even early low fidelity product representations, such as wireframes, powerpoint prototypes or mockups to MVP (Udacity, 2012).Somewhere in the middle is the definition by (Cooper and Vlaskovits, 2013).We are holding out the term MVP for the first stab at releasing a product that creates value for a specified customer segment. The definition is still not mentioning the busi-ness aspect, but is already stricter since it de-mands the creation of value for a customer. 19(Drucker, 2002)Even the innovation that creates new users and new markets should be directed toward a specific, clear, and carefully designed applica-tion. Effective innovations start small.(p9) Peter F DruckerFinally (Cooper and Vlaskovits, 2013) addressed this confusion between the first attempt at put-ting a product in front of customers (MVP), ver-sus running experiments to educate the prod-uct development assumptions and other risky aspects of your business model. The latter they call specifically viability experiments. (Cooper and Vlaskovits, 2013)viability experiment refers to tests you run to validate aspects of your business model.(Kindle Locations 3725-3735). To sum up, the understanding of the minimum viable product varies from (Udacity, 2012) any version of a product that provides customer feedback, through (Cooper and Vlaskovits, 2013) the first version of a product that creates value, to (Ries, 2011), (Cooper and Vlaskovits, 2013) the version which is capable to test business aspects of a business model.ACADEMIC ROOTSThis summary focuses on strengthening the Lean Startup methodology from an academic perspective, since the lean startup has gained popularity just recently and it might be ques-tionable if such an immature field is trustworthy enough.First of all, Steve Blank was identified as the most influential author, whose work on customer de-velopment is used in all reviewed books related to Lean Startup. (Blank, 2013) Steve Blank is a consulting associate pro-fessor at Stanford University and a lecturer and National Science Foundation principal investigator at the Univer-sity of California at Berkeley and Columbia University. He has participated in eight high-tech start-ups as either a cofounder or an early employee. (p. 4)Moreover, as this work indicated and as Steve Blank admits (Blank, 2013) (Blank, 2013b), he was inspired by the works of Drucker, Christens-en, Mcgrath and Macmillan. In particular this is reflected in searching for a business model Christensen (1997, 2003), focus on customer needs, starting small, embracing change (Druck-er, 1985, 1998, 2001, 2002), validating assump-tions (Mcgrath and Macmillan, 1995) The term Lean Startup originated in the very first book of Steve Blank (Blank, 2006), in which he described the process of customer develop-ment. However, the Lean Startup movement was glob-ally launched with the book of Ries (Ries, 2011), a student of Steve Blank. Eric Riess connected the lean principles (Womack and Jones, 2003) and agile development with already existing customer development. In 2012 Steve Blank published a startup own-ers manual (Blank and Dorf 2012), in which he makes use of the Business Model Generation (Osterwalder and Pigneur, 2010). RELATED LITERATURE AND THEORETICAL FOCUS | DESIGNDESIGNINTRODUCTIONIn the previous chapters it is shown that inno-vation is not likely to happen in an already ex-isting business model. Therefore, it is needed to search for a new model, when conventional management processes do not work. Therefore it is necessary, that all assumptions are tested with users and turned into facts. First of all, it is needed to define such a broad term as design. Ralph and Wand identified 33 definitions in literature. The definitions were evaluated and based on them synthesized a new definition, in the attempt to address all pos-sible issues. (Ralph and Wand, 2009) (noun) a specification of an object, manifested by an agent, intended to accom-plish goals, in a particular environment, using a set of primitive components, satisfying a set of requirements, subject to constraints; (verb, transitive) to create a design, in an environment (where the designer operates) (p . 6)As a result, the definition is quite broad and cap-tures many different cases. Additionally it dem-onstrates the universal nature of design and its applicability in different domains. Despite the broad character of the definition, there is noth-ing said about the intended users within the design process, or their relation to the design itself. This might indicate that not all design dis-ciplines are user centred.For the purposes of this work, in which disrup-tive innovation is tightly connected with tech-nology, and startups are extensively using the advantages of technologies like the internet , the further focus is narrowed to Human Com-puter Interaction design (HCI). (Carroll, 1997)HCI is a science of design. It seeks to understand and support human beings interacting with and through technology. (p502)Two major trends connected with design were identified, firstly designing for usability and sec-ondly designing for user experience. DESIGNING FOR USABILITY(Nielsen, 1992) In the distant past computers were used mostly by technically skilled users who were specialized and trained to use them and who were willing to accept the challenge of overcoming poor usability. Back then computers were very expensive, used just by a small num-ber of people and performing specialized tasks. Thus, it made sense to require a high degree of learning and expertise of the users. This has changed as computers became cheap-er, reached a broader group of users, and com-puters were capable of performing a great variety of tasks. Consequently user interfaces became much more important than they used to be. Users were no more only specialized and trained persons, but lower hardware prices ena-bled a whole new population of users to have their own computer. (p. 12)Allan Cooper (Cooper, 1999), described in his book the problem resulting from computers meeting the mass market. The issue was that programmers were and still are more special-ized to the computers needs than to users needs. Unfortunately developing user interfaces relied many times upon programmers. There-fore, great ideas were implemented and the working systems were wise, however they had a non-user-friendly design. In other words, it was about having features and functions that were just as good as users could perform their tasks with them, despite the poor interaction design between the computer systems and the users. Allan Cooper used a suitable metaphor: The bear is really a terrible dancer, and the wonder isnt that the bear dances well but that the bear dances at all. (p. 26)In short, users were happy to have functionality so that they were willing to find their own way to 21deal with bad interaction design. As a result, the challenge of usability naturally arose. (Gould and Lewis, 1985) presented three basic principles that would lead to ease the use of a computer system:Early Focus on Users and Tasks (Gould and Lewis, 1985) Designers must under-stand who the users will be by directly studying their cognitive, behavioural, anthropometric, and attitudinal characteristics, and in part by studying the nature of the work expected to be accomplished. (p. 300)Empirical Measurement (Gould and Lewis, 1985) Early in the develop-ment process, the intended users should actu-ally use simulations and prototypes to carry out real work. Their performance and reactions should be observed, recorded, and analyzed. (p. 300)Iterative Design (Gould and Lewis, 1985) When problems are found in user testing, they must be fixed. This means design must be iterative using cycles of design, test and measure, and redesign, repeat-ed as often as necessary. (p. 300)Based on these principles (Nielsen, 1992) pre-sented the first usability engineering lifecycle model, which was a modified and extended ver-sion of Gould and Lewis work. (Nielsen, 1992) To sum up, the most basic ele-ments in the usability engineering model are empirical user testing and prototyping, paired with iterative design. Such an approach allows testing, prototyping and planning modifications that under typical resource constraints are only feasible in the prototyping stage. Otherwise, it is nearly impossible to design a user interface right the first time. (p. 13)Designing for usability became meanwhile a mature field, that is recognized in (ISO/IEC 9241-210, 2010).(ISO/IEC 9241-210, 2010) Usability: The capability of a system to enable specified users to achieve specified goals with: effectiveness, efficiency and satisfaction in specified contexts of use. (p. 3)DESIGNING FOR UX(ISO/IEC 9241-210, 2010) Usability is the aspect of HCI devoted to ensuring that HCI is, among other things, effective, efficient and satisfying for the user, referring to the pragmatic and non-emo-tional aspects, including both, objective perfor-mance measures and subjective opinion meas-ures. (p. vi) However, technology is right now not only part of the working environment, moreover it is becoming central to human life. Therefore new requirements arise under the umbrella term User Experience, a concept that (Wiklund-Engblom and Hassenzahl et al., 2009) recently gained momentum in the field of HCI. Although, many different definitions of user experience exist, there seems to be an agreement that UX complements a traditional, usability-oriented ap-proach by going beyond pragmatic task-relation to approaches focused on human emotions and needs. Thus, UX is a holistic approach focusing on the felt experiences emphasizing the totality of emotion, motivation, and action in a given physi-cal and social context. (p. 1)A similar argumentation is presented by (Hart-son and Pyla, 2012), who point out that the broader term of user experience refers to what the user feels internally, including the effects of usability, usefulness and the emotional impact. The emotional aspect addresses pleasure, fun, aesthetics, novelty, originality, sensations, and experiential features. (p. 20, p. 24)(Hassenzahl and Roto et al., 2009) Finally, the definition that was proposed from survey re-sponses of 275 researchers and practitioners from academia and industry, is describing UX as something individual that emerges from in-teracting with a product, system, service or an object. This definition is in line with the follow-ing definition.(ISO/IEC 9241-210, 2010) A persons perceptions and responses that result from the use or anticipated use of a product, system or service. (p. 1)RELATED LITERATURE AND THEORETICAL FOCUS | DESIGNFigure 6: The Wheel lifecycle adapted from (Hartson and Pyla, 2012) (p.54)Figure 7: Interaction design lifecycle model adapted from (Rogers and Preece et al., 2011) (p.332)Realize design alternativesCreate Interaction design conceptsUnderstand user work and needsVerify and rene interaction designiteratemove back to previous development activityiteratemove back to previous development activityiteratemove back to previous development activitymove back to previous development activityDESIGNEVALUATEPROTOTYPEANALYZEiterateEvaluatingEstablishing requirementsDesigning AlternativesPrototypingFinal product23Recent Lifecycles addressing user experience(Hartson and Pyla, 2012), (Rogers and Preece et al., 2011), both books follow quite a similar mod-el, in which most projects start with an analy-sis - understanding a users needs, establishing requirements. Based on this, some design solu-tions are proposed and prototyped so they can be evaluated. Then the feedback from the evalu-ation might be used to adjust the requirements, explore new needs or just jump into the rede-sign phase and create a new prototype. Moreover these approaches are still following the principles presented by (Gould and Lewis, 1985): early focus on users, empirical measure-ment and iterative design. Interestingly the last point mentioned - iterative design - is described in finer detail and divided into two activities, de-signing and prototyping, in recent frameworks. This change might happen due to the complex-ity of the design as it is described in: (Hartson and Pyla, 2012) The design domain is so vast and complex that there are essentially infinite design choices along many dimensions, affected by large num-bers of contextual variables. (p. 58)Finally, (Hartson and Pyla, 2012), (Rogers and Preece et al., 2011) emphasize that models are not prescriptive. (Rogers and Preece et al., 2011) explains that the model is not a suggestion how all interactive products should be developed, it is rather their belief what is practiced in the field and it is based on their observation and re-search. (p. 332) (Hartson and Pyla, 2012) argue that this is only a template showing all possibilities and in real practice the activities presented in the model do not have such clear boundaries. (p. 55-57)HUMAN CENTRED DESIGNIn both approaches, designing for usability and designing for user experience the real users and their goals paired with iterative design and eval-uation is the driving force of product develop-Understand and specify the context of usePlan the human-centred design processSpecify the userrequirementsProduce design solutionsto meet user requirementsEvaluate the designsagainst requirementsIterate,where appropriateDesign solutionmeets user requirementsFigure 8: Human Centred Design activities adapted from (ISO/IEC 9241-210, 2010) (p. 11)RELATED LITERATURE AND THEORETICAL FOCUS | DESIGNment. This philosophy is called Human Centred Design and is described in detail belowHuman Centred Design is an approach to interactive systems development that aims to make systems usable and useful by focusing on the users, their needs and requirements. This approach enhances effectiveness and efficiency, improves human well being, user satisfaction, accessibility and sustainability, and counteracts possible adverse effects of use on human health, safety and performance. (p. vi)Lifecycle of Human Centred DesignThe lifecycle described in the standard makes as well use of the iterative cycle and adds the requirement to plan to allow iteration in prac-tice. Finally, standard (ISO/IEC 9241-210, 2010) describes 5 process activities, that are interde-pendent, which does not imply linearity, rather it illustrates that each Human Centred Design activity can benefit from other activities. (p. 10)Comparing with previously described lifecycles there are some recurring patterns. It can be no-ticed that already twenty years ago focus on us-ers, empirical measurement and iterative design are even nowadays an integral part of (ISO/IEC 9241-210, 2010). Again, the models described by Interaction (Rogers and Preece et al., 2011), (Hartson and Pyla, 2012) are more granular in a phase of design. Consequently, (Hartson and Pyla, 2012), raised the objection, that despite the name of standard containing design, the cycle does not focus on design as a separate activity, but design is merged with the implementation in the produce design solutions activity (p. 77)However, (ISO/IEC 9241-210, 2010) explains that it does not assume any particular design process rather it is complementary to existing design methodologies and provides a human centred design perspective that can be integrated with-in different design processes. Whatever the design process is, a human cen-tred approach should follow the principles listed below :(ISO/IEC 9241-210, 2010) The design is based upon an explicit understanding of users, tasks and environments Users are involved throughout design and development The design is driven and refined by user-centred evalu-ation The process is iterative The design addresses the whole user experience The design team includes multidisciplinary skills and perspectives. (p. 5)In conclusion, all of those principles were iden-tified in the reviewed literature (Rogers and Preece et al., 2011), (Hartson and Pyla, 2012) , whereas the first 4 principles were presented al-ready in (Gould and Lewis, 1985), the principle of addressing the whole user experience has arisen additionally in recent years. SUMMARYEven though some design disciplines might not be user centred, Human Centred Design is not human centred just by its name , human centricity is hardwired in its activities and prin-ciples. Ultimately it was shown that designing for usability and user experience follow Human Centred Design, since they are sharing the same principles and activities. 25LITERATURE FINDINGSCOMPARISON HCD X LSIntroductionThe main research question of this work is the role of Human Centred Design in startups. Therefore the Lean Startup method and Human Centred Design were analyzed and compared, in order to understand the similarities and differ-ences, and to eventually identify the points that could enrich both approaches. To do so, based on the reviewed literature the sources illustrating each approach were identi-fied. The Lean Startup is represented by the work of (Blank, 2012), (Blank, 2013) who introduced customer development already in (Blank, 2006) and his ideas were used and further developed by other authors.Human Centred Design, as it was identified is an integral part of HCI design and is well docu-mented in (ISO/IEC 9241-210, 2010).Those two approaches were used and analyzed for the purpose of comparison.Similar principlesCornerstone principles of Human Centred De-sign introduced by (Gould and Lewis, 1985) are still contemporary and common for both either Human Centred Design and Lean Startup. That means both approaches embrace early focus on users, empirical measurements and iterative process.Different principlesLean Startup is dealing with unknown business model, what is a cause that all ideas are treated as assumptions, that have to be validated with customers. Validating assumptions is done through viability tests with emphasis on speed. As a result of such viability tests, lean startup enables major changes to developing business model called pivots. On the contrary, Human Centred Design has no such business concern, viability is not being tested and there is no way to change a business model. Business aspect is only marginal. Simi-larly, in Human Centred Design there is not such emphasis on validating assumptions.HCD Principles (ISO/IEC 9241-210, 2010) Lean Startup Principles (Blank, 2013)UsersThe design is based upon an explicit under-standing of users, tasks and environmentsUsers are involved throughout design and developmentListen to customers (get out of the building)Design SolutionsThe design is driven and refined by user-cen-tred evaluationThe design addresses the whole user experi-enceDesigning ExperimentsRunning Tests with CustomersInsightsBusinessSketch out your hypothesesProcessThe process is iterative Quick, responsive developmentFigure 10: Comparison of Human Centred Design and Lean Startup principles RELATED LITERATURE AND THEORETICAL FOCUS | LITERATURE FINDINGSSimilar activitiesThe correspondences are the same as at the principles level, early focus on users, empirical measurements and iterative process. This is especially true for the first phase of customer development that aims to achieve a problem solution fit.Different activitiesHowever, there are some significant differences in the activities. Firstly, the customer develop-ment process is more prescriptive and divided into separate phases which follow each other. Secondly, each phase has its own insight cycle that resembles the Human Centred Design life-cycle, however the Human Centred Design life-cycle starts with understanding user needs and the context of use, the insight cycle starts only with the assumptions of the founders that are being tested later. Finally, the goal of customer validation is to achieve a product market fit in other words to validate the viability of an emerg-ing business model which is a very unique phase of customer development. As a result of this ac-tivity, the business model is either that a vali-dated startup enters the transformation into an established company, or the founders make a pivot and the cycle starts over again.Suggestions to improve Lean StartupThe Human Centred Design principles and ac-tivities are undoubtedly present in the Lean Startup Methodology, in particular customer discovery, the phase which aims to find a prob-lem solution fit. Human Centred Design offers a deeper and more mature perspective on un-derstanding the needs of humans and their environment. Although Lean Startup has a very holistic approach to creating new businesses, there seems to be a demand for better methods and techniques to explore in more detail the re-lationship between value proposition and cus-tomer segment. Recently (Maurya, 2012) with the Lean Canvas and Alex Osterwalder (Business Model Alchemist, 2012) with the Value Proposi-tion Canvas have just focused on this relation-ship between value proposition and customer segment.Therefore, there might be some space to im-prove Lean Startup from the perspective of Human Centred Design. Startups could benefit from well developed methods addressing fit be-tween value proposition and customer segment.Suggestions to improve Human Centred DesignHuman Centred Design originated as an answer to software which was hard to use, the busi-ness model was out of question that time. Al-though Human Centred Design became more holistic and (ISO/IEC 9241-210, 2010) addresses impacts on a number of stakeholders (not just those typically considered as users), there is still much unclear about the business perspective in Human Centred Design and how to deal with it. Here Human Centred Design could benefit from the approaches applied by lean startup, such as testing assumptions and developing a business model to either understand the business per-spective, or to develop one.Customer Discovery Customer Validation Customer Creation Company BuildingPivotSEARCH EXECUTIONFigure 11: Customer De-velopment Process adapted from (Blank and Dorf 2012) (Kindle Location 665).27Understand and specify the context of usePlan the human-centred design processSpecify the userrequirementsProduce design solutionsto meet user requirementsEvaluate the designsagainst requirementsIterate,where appropriateDesign solutionmeets user requirementsDesign ExperimentHypothesesInsightTestFigure 12: The Customer Development Insight Cycle adapted from (Blank and Dorf 2012) (Kindle Location 888)Figure 13: Human Centred Design activities adapted from (ISO/IEC 9241-210, 2010) (p. 11)RELATED LITERATURE AND THEORETICAL FOCUS | LITERATURE FINDINGSIDENTIFIED ISSUESSummary of the Issues found in LiteratureAs the comparison above suggests Lean Startup shares the Human Centred Design principles and adds the viability perspective. Lean Startup is still quite a young movement compared to Human Centred Design therefore there is a good chance that Lean Startup could benefit from a much more mature discipline such as Human Centred Design. Research questions that arose due to the com-parison: Are Startups familiar with the principles of Human Centred Design? What Human Centred Design methods are actually being used by startups?Is there any correlation between being successful and using Human Centred Design as a startup?Interestingly there is another issue, which is out of scope of the above stated research questions, this issue appeared during the literature review and will be addressed only marginally.Is Human Centred Design an Innovation Killer?Verganti, had come to design after conducting research on the management of technological innovation, the research has already appeared in (Verganti and Alvarez et al., 2006). These thoughts were further developed in his following book (Verganti, 2009) in which he ba-sically claims that radical innovations of mean-ings do not come from user-centered approach-es. (p. 10)Norman, a pioneer of Human Centred Design, discovered Vergantis work and they co-wrote a paper together - (Norman and Verganti, 2012), in which they both agreed that Human Centred Design is not the right tool for radical innova-tion. Their approach to innovation is defined as follows:Incremental innovation: Improvements within a given frame of solutions (doing better what we already do); Radical innovation: A change of frame (doing what we did not do before). (p. 5)In (Norman and Verganti, 2012) Norman illus-trated Human Centred Design as a form of hill climbing a well-known mathematical procedure for finding local optimization. He applied this paradigm to incremental and radical innovation. Hill-climbing methods get trapped in local maxima. Incremental innovation attempts to reach the highest point on the current hill. Radical innovation seeks the highest hill. The implication for design is clear: because Human Centred Design is a form of hill climbing, it is only suited for incremental innovation. (p. 3)(Norman and Verganti, 2012) In Figure 13, height along the vertical axis, represents product qual-ity and position along the other dimensions rep-resents choices among various design param-eters. A product might start off at A. Through Human Centred Design the product takes a series of incremental innovations, eventually bringing it to its maximum quality within the ex-isting design parameters - point B. To move to a different hill, one with a higher potential, radical innovation is needed. This comes about through either technology or a change in meaning, lead-ing to point C on a higher hill. Only then Hu-man Centred Design is again needed to make the necessary incremental innovations to reach the maximum potential. (p. 3)To sum up, Norman claims that:Human Centred Design is suitable only for in-cremental innovation (doing better what we already do) of meanings or technology, but it is not capable of radical innovation of meanings and technology. (doing what we did not do be-fore).Such statement could possibly contradict what have been argued so far. It was shown that Lean Startup operates in high uncertainty due to its disruptive innovative nature. But more impor-tantly, it was demonstrated that Lean Startup principles and activities are in line with Human Centred Design. That means, taking the pre-29sumption that startups are innovative, Human Centred Design should be innovative in the same fashion. So why are Norman and Verganti not in favour of it? First, although Normans definition of incre-mental (doing better what we already do) and radical innovation (doing what we did not do before) is quite close to Christensens defini-tion of sustaining (better products for better customers) and disrupting innovation (compet-ing against non-consumption), Norman entirely omits the role of the business model and the business perspective. Interestingly, the role of the business model is a crucial aspect for both, disruptive innovation and Lean Startup. Moreo-ver, Christensen claims that (Christensen, 2006) not technology itself is disruptive but the busi-ness model is. (p. 43) Furthermore, Christensen developed (Christensen and Anthony et al., 2007) an Human Centred Design oriented tech-nique called jobs to be done to search for in-novation opportunities. Similarly, (Drucker, 2002), one of the most in-fluential business thinkers, made a strong con-nection between business and innovation, he illustrated entrepreneurship as a certain kind of activity centred around innovation and added they [innovators ] go out and look at potential users to study their expectations, their values, and their needs. (p. 9) Again, innovation, business and the human centred approach are connected. More recently Paul Bennett, senior executive at IDEO, a leading design and innovation consultancy said: (Design Council, 2010) Design is business and business is design. The two are absolutely intrinsically linked.Figure 9: As it was already shown, Lean Startup has an Human Centred Design core, which is set to the context of searching for a business model. This approach enriches Human Centred Design with viability testing. Then based on the viability testing it is possible to either iterate or to make major changes to an emerg-ing business model. A similar illustration can be drawn using the same metaphor as Norman (hill climbing), with the difference that the hill represents a business model. Startups are employing Human Centred Design (customer discovery phase) to quickly climb a hill in order to be able to test the viability of that hill (customer validation phase) and as a result they either proceed (starting to build a company) on the same hill or change the hill (pivot).Finally, it is not possible to draw any conclusion since Radical Innovation by Norman and Ver-ganti is more focused on the impact on the de-HCD Meaning or Technology Change HCD ABCDProduct QualityDesign ParametersFigure 14: The hill-climbing paradigm applied to incremental and radical innovation reprinted from (Norman and Verganti, 2012) (p. 3)sign qualities of a product, whereas Disruptive Innovation, respectively Lean Startup is more focused on the market impact of a product. Despite some similarities both sides have a dif-ferent understanding of innovation. Neverthe-less there is some indication that in the worst case Human Centred Design itself is neutral to innovation, but more likely by the evidence of Lean Startup, and academics such as Drucker and Christensen Human Centred Design in com-bination with searching for a business model is even supporting innovation. Thus, Human Centred Design depends on the context, in an established company which is executing an al-ready existing business model Human Centred Design might help to improve existing products, in startups searching for a business model Hu-man Centred Design might help to foster new products.Further research is needed to deeply under-stand the different points of views on innova-tion, either from the business perspective, or the design qualities perspective.Based on this issue, a new research question ap-peared.To which extent are startups innovative in real life practice?RESEARCH METHOD | THE PROCEDURESRESEARCH | METHOD33METHODLuk Imrich a student of usability engineering, supported by his supervisors, Prof. Dr. Karsten Nebe, Prof. Dr. Ingeborg Schramm-Wlk, had some solid foundation of Human Centred De-sign, but only some experience with startups based on occasional cooperation. Therefore Luk Imrich has decided to strengthen his un-derstanding based on literature review, and by visiting and talking to local startup authorities. He was lucky to meet Vidar Andersen, a startup evangelist who brought and actively partici-pated as an instructor in Startup Weekend Next Cologne. Besides that Vidar Andersen received training from Steve Blank and became an offi-cial instructor of the Lean Launchpad, a start-up educational curriculum taught at Stanford, Berkeley and Colombia among others. Luk Imrich met Vidar Andersen personally several times. During these fruitful sessions, Luk Im-rich presented his current state of his thesis and discussed his findings in literature.Furthermore, Luk Imrich attended the Lean-camp Rotterdam, an open space conference, where he met Salim Virani, who runs workshops to help startup accelerators to optimize their programs. Moreover, Salim Virani brings to-gether the worlds of Lean, Agile and Design in the above mentioned Leancamp unconference. Salim Virani helped Luk Imrich through per-sonal consultations, in which they talked about intersections of the Lean Startup methodology and Human Centered Design.Next, Luk Imrich visited Vojtch Krmek, man-ager in the startup accelerator StarCube, which is part of the South Moravian Innovation Center that aims to promote enterprise skills develop-ment and the commercialization of research in the South Moravian Region. Vojtch Krmek supported Luk Imrich with valuable first hand insights from early stage startups. Finally, Luk Imrich met Michal Maxian, the StartupWeekend Bratislava lead-organizer. Michal Maxian illustrated some challenges that startups have to face and provided the perspec-tive of a startup founder.Since Luk Imrich - always happy to experiment - lacked solid experience in academic research on the scope of a Master Thesis the research has substantially changed its nature several times. First, after immersing into the field of startups, Luk Imrich intended to continue with search-ing and talking with local startup community leaders. This time in form of semi structured interviews focusing on intersections of Human Centred Design and the Lean Startup methodol-ogy. Soon he realized that such an approach is strongly biased by his own selection and possi-bilities. Therefore he decided to alternate it with a scientifically more valid way. Second, the research was supposed to be based on a stratified random sample of startups. Through websites such as, was he was able to create a list of startups founded in Berlin in years 2010 and 2011. Such list contained startups that were sup-ported by Angel and Venture Capitalist Money. Those funded startups were considered suc-cessful. The plan was to collect as many random responses, as it is needed to achieve the same ratio of funded and non-funded startups as in real practice. Then he prepared a personalized e-mail for each startup reflecting its activities and progress, in which he asked for an half an hour long interview. The interview was supposed to be semi structured again. Out of approximately 50 startups that he contacted, 4 answered. Con-sidering the amount of time spent to get 4 re-sponses he stepped back and started to think about a more viable approach.Finally Luk Imrich chose to do his research in form of a questionnaire. In favour of this solu-tion were facts like the random sample, ease of reach and time saving, since it is not necessary to take part as an interviewer. On the contrary RESEARCH | METHODwas fact that the self-reported data might differ from the actual behaviour. The questionnaire was created based on the structure of the previ-ously intended interviews and expanded by the description of Human Centred Design methods. Then he asked the four contacts he had ob-tained before to pretest the newly created ques-tionnaire in the way of adapted remote usability testing. Such sessions were conducted via Skype and the participants were encouraged to think aloud. Based on the feedback the questionnaire (see figure 31) was improved in order to be un-derstandable. The questionnaire itself was cre-ated by using a web based tool - Typeform. Only then the questionnaire was distributed via so-cial networks such as Facebook groups, Google groups, Linkedin groups and Twitter. 0204060%0-6monhts7-12monhts13-18monhts25-36monhts37-900monhts19-24monhtsFigure 14: Distribution of participantsFigure 15: Age of startups expressed in spent months35THE PROCEDURESAs already mentioned, the questionnaire (see Appendix B, figure 31) was distributed through social networks. This process raised two chal-lenges:First, the link to the questionnaire was one link among many others in the social news. There-fore it was needed to provide an appealing text to arise enough interest to make startups con-tinue to questionnaire itself. Following text was used with some slight modifications across all social networks:Hey! I am currently writing a dissertation about design in startups.Would you like to know which design methods are useful for you?Be a part of the study & get my paper with design methods used by successful startups., once the potential respondents visited the link, it was necessary to grab their attention. For this reason, strong visual content accom-plished with the description of the provided value. (see Appendix A, figure 30)As an outcome of such effort, the landing page of the questionnaire was visited by 1,134 unique visitors from the 13th of May until the 9th of June. The questionnaire was completed and submitted by 106 visitors, which is a 9% response rate. Average time of completion was 17:49 minutes. Figure 14, respondents were from various coun-tries such as: Austria, Belgium, Brazil, Bulgaria, Canada, Chile, Croatia, Curacao, Czech Republic, Estonia, France, Germany, Hungary, India, Indo-nesia, Italy, Kenya, Mexico, Netherlands, Nor-way, Portugal, Romania, Russia, Serbia, Slovakia, Spain, Switzerland, United Kingdom, United States.The majority was from Europe, in particular Germany, another significant part of responses came from the USA. The figure 15 shows the startups that participat-ed in the research and their age represented in working months.Since, this research did not strive for statisti-cal significance, rather to discover a signal that might indicate possible answers to the research questions collected the sample was considered acceptable. In this sample the vast majority of startups were younger than 12 months and dis-tributed all over the world, mostly in Europe and the USA. In addition to the already described processes, it is needed to describe in detail different parts of the questionnaire, each part was based on the open discussions with startup professionals and reviewed literature in order to answer the research questions.Is there any correlation between being suc-cessful and using Human Centred Design as a startup?Despite the not most suitable sample, consist-ing of mostly early stage startups, Luk Imrich still tried to illustrate the success of the start-ups. Besides the profitability metric, there were other two interesting measurements, such as venture capitalist and angel founding money. These metrics were taken from the much more complex questionnaire (Marmer and Dogrultan et al., 2012), which examined this problem in depth with the sample of thousands of startups. Unfortunately such approach was not possible in this study, therefore the amount of questions focused on success was significantly reduced to 3 (number of months working, profitability and interest of investors). Based on the discussions and literature review, it was expected to see a strong correlation be-tween using Human Centred Design and being successful.RESEARCH | THE PROCEDURESAre Startups familiar with the principles of Hu-man Centred Design? This is one of the crucial questions to answer. Even after visiting different local startup com-munities, it wasnt clear what the answer could be. During the Leancamp (Netherlands), partici-pants showed lively interest in the topics of user experience, since they were uncertain if their approach is right. Community in Czech Repub-lic performed in a similar fashion, although they had an idea about Human Centred Design pro-cess, they were struggling to apply this knowl-edge in real life practice. While creating this section following principles and activities (9241-210, 2010) were considered:PrinciplesThe design is based upon an explicit understanding of users, tasks and environmentsUsers are involved throughout design and development The design is driven and refined by user-centred evalu-ation The process is iterative The design addresses the whole user experience The design team includes multi-disciplinary skills and perspectives ActivitiesPlan the human centered design process - this activity was omitted due to findings in the reviewed literature, which assumes a different way of management embrac-ing uncertainty. (Mcgrath and Macmillan, 1995) Understand and specify the context of use Specify user requirements Produce design solutions to meet user requirements Evaluate designs against requirementsThese activities and principles were comple-mented with a set of questions exploring the motivation of startups.What is most important to you?(Cooper and Vlaskovits, 2013) a. Theres a specific (large or small) market segment Im committed to and passionate about serving. b. Its important that everyone get ahold of my product. c. My technology is game changing. I just need to find the right application for it. d. My vision is radical and I will see that it is made real. e. My vision isnt as important as the fact that I will do whatever it takes to change the world.(Kindle Locations 2078-2083)What Human Centred Design methods are actually being used by startups?This question is another interesting question to be answered. Essentially the question builds on the previous one and goes further to see par-ticular methods which are being used right now. Therefore expectations based on experience and literature review were similar as previously, which means that startups are aware of avail-able methods, although they do not really make use of them. Methods were selected by using the already mentioned literature (ISO/IEC 9241-210, 2010), (Hartson and Pyla, 2012), (Rogers and Preece et al., 2011) and completed by the methods pub-lished in (ISO/IEC TR 16982, 2002)The classical set of Human Centred Design meth-ods was enriched by the highly recommended method for startups the Business Model Can-vas (Blank and Dorf 2012).To which extent are startups innovative in real life practice?Last but not least, as already mentioned in the chapter Findings, the disturbing possibility of a clash between using Human Centered Design and being innovative was found in the literature review. Such finding was partially supported by talking with startup communities, which were barely focused on the innovation aspect and were rather aimed at solving the business perspective. For the purpose of this research was used a part of the already developed ques-tionnaire adapted from (Cooper and Vlaskovits, 2013).37Is it necessary to distinguish between custom-ers and users?This question is an additional, rather marginal one, that occurred while writing the thesis and came up with the decision to use the terms user and customer interchangeably. It was assumed that the distinction between those two terms is needed only for the minority of startups, so generally it is acceptable to merge those two approaches.FINDINGS RESULTS | DISCUSSIONFINDINGS | RESULTS RESULTS IS THERE ANY CORRELATION BETWEEN BEING SUCCESSFUL AND USING HCD AS A STARTUP?The figure 16 illustrates the motivation of start-ups. The Human Centered Design perspective is represented by the option: There is a specific market segment we are committed to and passionate about serving.There is no significant difference between start-ups that are not profitable yet, profitable, and funded startups in terms of motivation. There is only a slight jump while comparing not profit-able yet and profitable startups.020406080%Theres a specic market segment we are committed to and passionate about servingOur vision isnt as important as the fact that we will do whateverit takes to change the worldOur vision is radical and we will see that it is made realOur technology is game changing. We just need to nd the right application for itIts important that everyone considersour product a must-haveNot Protable yet Protable Funded byVenture CapitalistsFunded byAngel InvestorsFigure 16: Motivation of startups by their success41ARE STARTUPS FAMILIAR WITH THE PRINCIPLES OF HUMAN CENTRED DESIGN? (1/4)These graphs, figure 17,18 describe the motiva-tion of startups at the beginning in comparison with the motivation reported at the moment of answer from the point of view of profitable and non-profitable startups.It is clear that the market segment is by far the most popular in both cases. Generally, there is no significant development in motivation, the only exception to this trend is the aspect of vi-sion, that has notably dropped over time.0204060%Its important thateveryone considers our product a must-haveOur technology is game changing. We just need to nd the right application for itOur vision is radical andwe will see that it is made realOur vision isnt asimportant as the factthat we will do whatever ittakes to change the worldTheres a specic market segment we are committed to and passionate about servingFigure 17: Motivation of startups in the very begin-ning020406080%Its important thateveryone considers our product a must-haveOur technology is game changing. We just need to nd the right application for itOur vision is radical andwe will see that it is made realOur vision isnt asimportant as the factthat we will do whatever ittakes to change the worldTheres a specic market segment we are committed to and passionate about servingFigure 18: Motivation of startups at the moment of answeringprofitableprofitablenon-profitablenon-profitableFINDINGS | RESULTS ARE STARTUPS FAMILIAR WITH THE PRINCIPLES OF HUMAN CENTRED DESIGN? (2/4)The figure 19 shows the use of different activi-ties and principles to understand users and peo-ple as reported by profitable and non-profitable startups. Within the non-profitable startups two groups can be seen, while the first,We have identified the relevant stakeholders, We have identified a particular type of user that is the most important to satisfy, We know what are the needs (jobs to be done) of the user and other stakeholders, is reaching acceptance among half of all re-spondents, the other group,We have identified the context of use (hardware, soft-ware, social and cultural aspects) relevant to the users, We know exactly what a day in the life of our user is like, is substantially underperforming and the latter principles have the acceptance of only about 15% of the startups represented in the research. Only an insignificant part of respondents, 3% was not aware of any presented principles or activities.Profitable and non-profitable startups follow a similar pattern.020406080%We have identied the relevantstakeholdersWe have identied a particular type of userthat is the most important to satisfyWe know what are the needs (jobs to be done)of the user and other stakeholdersWe have identied the context of use relevant to the usersNone of the aboveWe know exactlywhat a day in the life of our user is likeFigure 19: Endorsement of focus on users, their tasks, context of useprofitablenon-profitable43ARE STARTUPS FAMILIAR WITH THE PRINCIPLES OF HUMAN CENTRED DESIGN? (3/4)The bar chart graph, figure 20, demonstrates the use of various activities and principles while de-signing solutions from a point of view of profit-able and non-profitable startups. The adoption of principles and activities at non-profitable startups is quite high, fluctuating at about 50%. The least popular principle yet the most notable development isWe used different level of fidelity to communicate the proposed design to users and other stakeholders to obtain feedback, slightly less than 30% of respondents chose that option.Only an insignificant part of respondents, 3% was not aware of any presented principles or activities.This time there is an apparent discrepancy be-tween profitable and non-profitable startups, in particular no use of the principles We used different level of fidelity to communicate the proposed design to users and other stakeholders to obtain feedback and little use of We work in iterations to reduce uncertainty.020406080%We have designed userstasks, user system interaction and userinterface to meet userrequirements that we deniedWe used dierent level of delity to communicate the proposed design to users and other stakeholders to obtainfeedbackWe altered the designsolutions in responseto user centered evaluation and feedbackWe work in iterationsto reduce uncertaintyNone of the aboveWe explored severaldesign conceptsbefore we settled on oneFigure 20: Endorsement of focus on meeting user requirements and produced design solutionsprofitablenon-profitableFINDINGS | RESULTSARE STARTUPS FAMILIAR WITH THE PRINCIPLES OF HUMAN CENTRED DESIGN? (4/4)The figure 21 illustrates the use of different ac-tivities and principles during the evaluation.Among profitable startups a steady decrease in the adoption starting with the most popular We have used evaluation based on users perspective to collect new information about user needs to the least preferred We included long term monitoring of the use of the product, can be seen.However, profitable startups are breaking this trend, the most notable development here is the high adoption of the activity While testing, us-ers carried out tasks using prototype rather than just be shown of demonstrations or a preview of the designs.Interestingly, 5.3% of the non-profitable start-ups and 7.7% of profitable startups do not use any of the evaluation activities and principles, which is slightly more than producing design solutions or understanding users.020406080%We have usedevaluation based onuser's perspective to collect new information aboutuser needsWe have analysedthe results in order toget strengths andweaknesses of thetested solutionWhile testing, users carried out tasks using prototype rather than just be shown of demonstrations or a preview of the designsNone of the aboveWe included long term monitoring of the use of the productFigure 21: Endorsement of focus on evaluation the designs against require-mentsprofitablenon-profitable45WHAT HUMAN CENTRED DESIGN METHODS ARE ACTUALLY BEING USED BY STARTUPS? (1/4)This bar chart graph, figure 22, shows to which extent the above methods are being used on a regular basis. While the first 10 methods are scoring quite consistently around 60%, more interestingly there is a notable gap between Questionnaires and Workflow. Among the other least popular methods Personas, Expert Evaluation, Think-ing Aloud, Collaborative design. Can be found. 0204060%Web AnalyticsSketchingInterviewsPrototypingUser Based EvaluationUse Cases, User StoriesObservationBusindess Model CanvasQuestionnairesScenariosWorkowPersonasExpert evaluationThinking aloudCollaborative designWHAT HUMAN CENTRED DESIGN METHODS ARE ACTUALLY BEING USED BY STARTUPS? (2/4)The figure 23 illustrates the methods that start-ups never heard of. It is immediately clear that graph follows quite a steep curve, leading with methods such as Thinking Aloud, Collaborative design, Expert Evaluation. Figure 22: The most used methods on a regular basisFigure 23: Methods that startups never heard of020%Thinking aloudCollaborative designExpert evaluationWorkowPersonasBusindess Model CanvasPrototypingUser Based EvaluationScenariosUse Cases, User StoriesInterviewsSketchingWeb AnalyticsQuestionnairesObservationFINDINGS | RESULTSWHAT HUMAN CENTRED DESIGN METHODS ARE ACTUALLY BEING USED BY STARTUPS? (4/4)The figure 25 presents the methods that start-ups are aware of, yet they never used them. The most interesting method here is the Col-laborative design method, which previously scored as the least discovered method. 020%Busindess Model CanvasPersonasCollaborative designScenariosQuestionnairesPrototypingWorkowExpert evaluationUser Based EvaluationSketchingUse Cases, User StoriesInterviewsThinking aloudObservationWeb AnalyticsFigure 24: The most aban-doned methodsFigure 25: Known yet not used methods020%40%Collaborative designWorkowPersonasExpert evaluationThinking aloudQuestionnairesObservationScenariosUser Based EvaluationUse Cases, User StoriesInterviewsWeb AnalyticsPrototypingSketchingBusindess Model CanvasWHAT HUMAN CENTRED DESIGN METHODS ARE ACTUALLY BEING USED BY STARTUPS? (3/4)This bar chart graph, figure 24, describes meth-ods that did not prove to be useful and startups abandoned using them. The most striking method here is Business Mod-el Canvas, that was dropped by 15% of startups with an apparent distant to the remaining meth-ods. 47TO WHICH EXTENT ARE STARTUPS INNOVATIVE?This figure illustrates the attitude of startups to-wards innovation. It is clear that the vast majority of startups in-cline towards disruptive innovation. USERS AND PAYERS RATIOThis pie chart graph, figure 27 presents the ratio between the startups that monetize their users directly, and the startups that monetize users indirectly. It is obvious that for the majority of startups the users are the same as payers, however the num-ber of startups who monetize users indirectly is notably high.Disruptive startupsSustaining startupsNo. My users are the same as my payers.Yes. I often monetize my users indirectly.Figure 26: Attitude to-wards innovationFigure 27: Monetization of usersFINDINGS | DISCUSSION DISCUSSION ARE STARTUPS FAMILIAR WITH THE PRINCIPLES OF HUMAN CENTRED DESIGN?WHAT HUMAN CENTRED DESIGN METHODS ARE ACTUALLY BEING USED BY STARTUPS?The main purpose of the research was to answer if startups are aware of the Human Centred De-sign principles and activities as mentioned in the literature review. Although the research is acceptable due to its exploratory nature, there are two major sources of limitation. Firstly, that is the small sample size of profitable startups and secondly, the high fragmentation of responses across the whole world. On top of that, it is im-portant to bear in mind the possible behaviour-attitude conflict in these self-reported responses. Despite the above mentioned, the results of this study did show some awareness either on the side of principles, activities or on the side of methods.The most supportive finding is generally well adopted principles, activities (figures 17-21) and methods (figures 22-25) of the Human Centred Design. This is clear from the figures, in which only 3% to 7% of respondents were not familiar with any principle or activity. Another example is the high adoption (over 50%) of principles such as We have identified a particular type of user that is the most important to satisfy, (figure 19) We altered the design solutions in response to user entered evaluation and feedback, (figure 20) We have used evaluation based on users perspective to collect new information about user needs (figure 21).The Human Centred Methods were even more popular and used on a regular basis (50%-70%), e.g Web Analytics, Sketching, Interviews, Proto-typing, Use Cases, User Stories, User Based Eval-uation, Observation, Scenarios, Questionnaires. (figure 22)It seems possible that these results among start-ups are due to the Lean Startup Methodology and its impact on startups. Therefore it was pos-sible for startups to identify Human Centred De-sign principles and activities, even without pre-vious formal education in that field. Thus having in mind the above mentioned, startups are to some extent Human Centred. Another connected finding is human centred motivation. Such finding is supported by figure number 16, with the option There is a specific market segment we are committed to and passionate about serving.This answer is by far the most often chosen regardless profitability. This motivation only strengthens the human centred nature of the startups and is in line with Blank and his Cus-tomer Development method. (Blank and Dorf 2012)At the same time it is necessary to note that there were some significant discrepancies in the presented results hindering human centrism of startups. For example the principle We know exactly what a day in the life of our user is like, (figure 19)which addresses deep understanding of users scored fairly low, approximately 20% of startups stood for it. This might be caused by the fast pace and ever changing requirements in the world of startups, in which it is crucial to iterate fast (Blank, 2013). Even more surprising was that the principle We used different level of fidelity to communicate the proposed design to users and other stakeholders to obtain feedback (figure 20)was not used in profitable startups. This incon-sistency may be due to the later stage in which profitable startups are, and they are more fo-49cused on tweaking than on questioning a con-cept.Additionally, it is somewhat surprising that although strongly recommended methods such as the Business Model Canvas in the Lean Startup methodology and personas in Human Centred Design, figure 25, are on the one hand recognized and used, on the other hand start-ups are using them as a one time activity. This is not recommendable, neither for personas, nor for the Business Model Canvas, which should be rather living documents. The presented results are significant in two ma-jor aspects. Startups are aware of the Human Centred Design principles and they are actively using most of the presented methods. Further-more the research revealed some insights to im-prove the work of startups. Startups can benefit from the more mature Human Centred Design discipline and make better use of e.g. prototyp-ing in different levels of fidelity or using perso-nas on a regular basis. For the further research it is highly recommended to conduct research fo-cused more on the actual behaviour rather than the self reported data.IS THERE ANY CORRELATION BETWEEN BEING SUCCESSFUL AND USING HCD AS A STARTUP?Another important question of this research was the intention to answer whether startups using Human Centred Design have a competitive ad-vantage, in other words if they are successful.The results of the questionnaire, figure 16-25, did not detect strong evidence in favour. Thus it is still not clear if Human Centred Design is help-ful for startups.The reason for this is not clear but it may have to do with, incorrectly formulated questions, the focus on profitability and having a small sample of profitable startups. In particular it is question-able if profitability is a measure of success at the early stage of startups.Although there is no strong evidence, it is still interesting to see that the motivation, figure 16-18, of profitable startups was focused on There is a specific market segment we are committed to and passionate about serving, which is as it was discussed, human centred. However the same focus was reported among non profitable startups. To sum up, the question of success is quite hard to answer and there is no clear answer can be given based on this research.TO WHICH EXTENT ARE STARTUPS INNOVATIVE?Since the question was out of focus of the origi-nal research, it will be not elaborated in detail. In short, based on the results it could be said that startups incline towards disruptive innovation, as shown in figure. The present finding seems to be consistent with the approach in the litera-ture review, in which startups were examined in the context of disruption. Again, it is important to have in mind the possible behaviour-attitude conflict in these self reported responses. USERS AND PAYERS RATIOLast but not least, the question regarding the interchangeability of the terms users and cus-tomers. The result from figure 27 provides a strong evidence to distinguish between users and customers. As a result this finding revealed another major flaw of this work that assumed conformity between users and customers.CONCLUSIONS HUMAN CENTRED DESIGN AND THE LEAN STARTUP METHODOLOGY | THE ROLE OF DESIGN IN STARTUPSCONCLUSIONS | HUMAN CENTRED DESIGN AND THE LEAN STARTUP METHODOLOGY53HUMAN CENTRED DESIGN AND THE LEAN STARTUPThis thesis has investigated Human Centred Design and the Lean Startup. It is necessary to note, that very little was found in the literature in terms of published studies. As Bhide (Bhide, 2000) claims it is much easier to find data on large companies than on startups. The problem with startups is that way too many of them are created annually and the vast majority of them disappear soon after they are launched. Their financial records are private and often poorly maintained. (p. 4-5) Therefore this thesis has an exploratory nature without the aim of being sta-tistically significant. The most valuable finding to emerge from this work is that Human Centred Design and Lean Startup both share human en-tered core. The primary reason why is the strong presence of human centered design principles in the available startup literature. One example for all is Blank and his (Blank and Dorf 2012) Get out of the building recommendation, in other words that facts are not inside the building but among the potential users. This was presented later in the direct comparison of principles behind both methodologies. Ultimately, the research indi-cated that startups have a human centred mo-tivation, and are aware of its principles, activities and methods.Perhaps as significant as this is the fact that Hu-man Centred design should be part of a busi-ness itself. At least, it should be part of the busi-nesses that focus on innovations on the market. Such finding is not new and already Drucker was very vocal about it: (Drucker, 2002) Then they go out and look at potential users to study their expectations, their values, and their needs. (p. 9)In a similar context of business and disruptive innovation (as startups reported in figure 26), Christensen recommends to use the method called Jobs to be done. (Christensen and Raynor, 2003) A job is the funda-mental problem a customer needs to resolve in a given situation.(p. 2) Such definition is in a strong line with the pre-sented human centred design principles. Finally, a number of important limitations have to be considered. First, the research has only an indicative character due to its nature. It is not possible to draw any valid conclusions. Second, profitability as a tool to measure success was not proven as assumed. Nevertheless, the study has gone some way to-wards enhancing the understanding of startups. Through the literature it was shown that Hu-man Centred Design and Lean Startup share the same principles and the research showed that startups are aware of them. In a broader sense based on the above men-tioned conclusion it can be said that Human Centred Design is in worst case neutral to dis-ruptive innovation, but rather supporting in-novation. Therefore it is possible to some extent since Christensens and Normans definitions shared some common points, indicate that Hu-man Centred Design is not an innovation killer as Don Norman suggested. The key aspect seems to be the unknown busi-ness model which forces startups to discover opportunities instead of just iterating. However, this should be definitely explored in further re-search. CONCLUSIONS | THE ROLE OF DESIGN IN STARTUPS55THE ROLE OF DESIGN IN STARTUPSReturning to the title of this thesis, it should now be clearer what the role of design in startups is. The literature review and the research point out to another, this time more specific question par-tially answering the former one. Should design-ing for usability be a crucial activity for startups? The question arose from various aspects pre-sented in this work. The primary aspect is the process of customer development (Blank and Dorf 2012), that con-sists of four phases. As a reminder, the first phase is called customer discovery, which is about finding a worth solving problem and building a minimum viable product that solves this prob-lem based on. In the second phase it is focused on the validated viability of the product.Designing for usability is most valuable in these first two phases when it is necessary that the minimum viable product supports the intended users sufficiently to fulfil the discovered needs. Usability is the key element to enter the feed-back loop of the market. Only with accurate feedback it is possible to reveal the business op-portunity and see if there are real customers for such a problem-solution fit. The research figures illustrated as well that start-ups are interested and aware of the Human Cen-tred Design principles, the same principles as used for ensuring usability.Thus, to some extent there is already some natu-ral pull for usability as the literature suggests.Another aspect is more conceptual and con-nected with disruptive innovation. In particular, (Christensen and Raynor, 2003) competing with non-consumption, in which non-consumers are potential new consumers - consumers who have not yet discovered an accessible solution for their need (lack of money, skills). Interestingly, the usability (ISO/IEC 9241-210, 2010) extent to which a system, product or service can be used by specfied users (p. 3)seems to be the right approach. Those startups having usability in its core could compete with non consumption by fulfilling needs of custom-ers, who lack the skills to use already existing products.It should be noted that, this finding is supported by the research, in which was shown that the vast majority of startups incline to the disruptive side of innovation spectrum, see figure 26.To finalize, there is no clear and enough evi-dence based on the answers addressing the role of design in startups. However, there are indica-tions that designing for usability might be help-ful either at the strategic level or the pragmatic level of starting new businesses. Such a possibly broad scope of usefulness is noteworthy, so the future work needs to be established to provide better understanding of usability in the context of startups.APPENDIXAPPENDIX A | APPENDIX BAPPENDIX | A59APPENDIX AFigure 28: Customer Development Process reprinted from (Blank and Dorf 2012) (Kindle Location 665).Figure 29: The Customer Development Insight Cycle reprinted from (Blank and Dorf 2012) (Kindle Location 888)APPENDIX | AFigure 30: Landing page illustration61APPENDIX BQuestionnaireWhat was your motivation in the very beginning?A. Its important that everyone considers our product a must-haveB. Our technology is game changing. We just need to find the right application for itC. Our vision is radical and we will see that it is made realD. Our vision isnt as important as the fact that we will do whatever it takes to change the worldE. Theres a specific market segment we are committed to and passionate about serving 1 option to be selectedWhat is most important to you right now?A. Its important that everyone considers our product a must-haveB. Our technology is game changing. We just need to find the right application for itC. Our vision is radical and we will see that it is made realD. Our vision isnt as important as the fact that we will do whatever it takes to change the worldE. Theres a specific market segment we are committed to and passionate about servingone option to be selectedPeople and the world they live in - mark applicableA. We have identified the relevant stakeholdersB. We have identified a particular type of user that is the most important to satisfyC. We know what are the needs (jobs to be done) of the user and other stakeholdersD. We know exactly what a day in the life of our user is likeE. We have identified the context of use (hardware, software, social and cultural aspects) relevant to the usersF. None of the aboveone to all options to be selectedAre your users different from your payers?A. No. My users are the same as my payers.B. Yes. I often monetize my users option to be selectedInterviewsResearch method for direct contact with participants, to collect firsthand personal accounts of experience, attitudes, and perceptions.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedQuestionnairesSurvey instruments designed for collecting self-report information from people about their char-acteristics, thoughts, feelings, perceptions, behaviours, or attitudes.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedFigure 31: The Question-naire examining the role of human centred design in startupsAPPENDIX | BObservation of usersCollection in a precise and system way of information about the behaviour and the perfomance of users, in the contextof specific tasks during user activity.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedPersonas, User ArchetypesA description of the customer with the job he or she wants done is called a persona. Popularized by Alan Cooper in 2004, personas are a description of pretend users and what they wish to ac-complish. Wish to accomplish is another way of saying job hired for.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedUse cases, user storiesA use case is a written description of how users will perform tasks on your website. Each use case begins with a users goal and ends when that goal is fulfilled.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedUser work-flow mapWork flow map of the prototypical customer that diagrams how customers do their jobs or live their lives both with and without the new productA. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedBusiness Model Canvas, Lean Canvas, ...Strategic management template for developing new or documenting existing business models. It is a visual chart with elements describing a firms value proposition, infrastructure, customers, and finances. It assists firms in aligning their activities by illustrating potential trade-offs.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedProducing design solutions - mark applicableA. We have designed users tasks, user system interaction and user interface to meet user require-ments that we definied B. We used different level of fidelity to communicate the proposed design to users and other stakeholders to obtain feedbackC. We altered the design solutions in response to user centered evaluation and feedback D. We explored several design concepts before we settled on oneE. We work in iterations to reduce uncertaintyF. None of the aboveone to all options to be selectedSketchingQuick way to play with an idea. It communicates the proper stage of the idea to the viewers. Early, rough sketches just scream, This is an idea! Im not done!A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedScenarios / StoryboardsStorytelling technique that explores the future use of a product from a users point of view, help-ing design teams reason about its place in a persons day-to-day life.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedPrototypingTangible creation of artifacts at various levels of resolution, for development and testing of ideas within design teams and with clients and users.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedCollaborative design and evaluation (Card Sorting, Design Studio)Methods which allow different types of participants (users, developers, designers, ...) to collabo-rate in the evaluation or design of systems.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedEvaluation - mark applicableA. We have used evaluation based on users perspective to collect new information about user needs B. We have analysed the results in order to get strengths and weaknesses of the tested solutionC. While testing, users carried out tasks using prototype rather than just be shown of demonstra-tions or a preview of the designs D. We included long term monitoring of the use of the productE. None of the aboveone to all options to be selectedWeb analyticsWeb analytics are a gateway to become invested in what your customers are doing online, and why.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selected631 one option to be selected 1 one option to be selectedExpert based evaluationEvaluation based upon the knowledge, expertise and practical experience in ergonomics of the usability specialists.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedUser based testingTechnique used in user-centered design to evaluate a product by testing it on users. It gives direct input on how real users use the system.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedThinking-aloud protocolThink-aloud protocol is a method that requires participants to verbalize what they are doing and thinking as they complete a task, revealing aspects of an interface that delight, confuse and frustrate.A. We never heard about it B. We have heard about itC. We tried it and stopped D. We use/used it on a regular basisone option to be selectedAgile methodology used:A. SCRUM B. SCRUM/XP hybridC. Custom hybridD. ScrumbanE. KanbanF. XPG. Dont know XPH. We dont use any form of Agileone option to be selectedWhat skills do the founders have?A. Conceptual / User experience / Usability / IA DesignB. Visual Design / Front End DevelopmentC. Scaling / Database / Back End Development D. RecruitingE. PR / Branding / MarketingF. Domain ExpertiseG. Sales / Biz Devone to all options to be selectedIn which areas did you hire consultants, service providers or search for mentors?A. Conceptual / User experience / Usability / IA DesignB. Visual Design / Front End DevelopmentC. Scaling / Database / Back End Development D. RecruitingE. PR / Branding / MarketingF. Domain ExpertiseG. Sales / Biz Devone to all options to be selectedAPPENDIX | B65Where does your product or idea fall on the innovation spectrum?A. Adds functionality to existing product category B. Dramatically lowers cost of new product for an existing product categoryC. Highly tailors functionality for an underserved marketD. Is a new product category, new marketE. Is an existing product category for new large marketplaceF. 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