Making the Case for Service Design for Start-ups and Innovation
Applying our mindset and ways-of-working in a new frontier
Start-ups and innovation environments represent exciting, challenging and relatively-uncharted terrain for service design. Despite the fact that we as service designers are barely visible in the start-up world, and mostly unmentioned in their literature, my own experience as a service designer working with start-ups and innovation programmes has proven to me that we can add significant value in these settings. In this article I’ll look at hurdles to address and overcome in terms of mindset, and suggest some practical ways service designers can address this opportunity.
The innovation imperative
Large corporations today face threats from many sides. No longer can they assume that their customers of today will be customers tomorrow, and that their products and services will remain in demand for the years and decades to come. Several factors have made it much easier for startups to cover the distance from ‘Day 1’ to becoming a market disrupting threat to those corporations within seemingly no time.
Firstly, there are relatively low barriers for startups to enter the marketplace (and even become global players); with a good pitch deck and some demonstrated traction, huge amounts of venture capital are ready and waiting. Secondly, the ability to design and deliver fully digital services – and create entirely new markets, often through providing new, scalable platforms that connect supply and demand – can be accomplished with relatively small initial investments. Thirdly, resources (such as AWS) and techniques (blitzscaling, growth hacking and viral customer acquisition) enable incredibly rapid growth when the conditions are right. And lastly, customer demand and expectations steadily rise, just as the possibilities offered by new technologies do. Startups are nimble and hungry enough to adapt to these changes in ways that established organisations are typically not.
A start-up surge
The aforementioned factors have allowed increasing numbers of startups to enter the market and shake its very foundations. The global startup market created just over $3 trillion in value in the prior two years alone, and the eye-watering valuations of startups that grow big and go public mean that turnover rate of indices such as the Fortune 500 increases year on year.
Learning from the start-ups
Considering those factors, a failure to innovate threatens to doom large organisations. While Amazon (with the third largest market cap worldwide) stopped resembling a startup long ago, its ‘Day 1’ approach strives to keep it as adaptable and as fast in decision-making as a startup.
Spurred by these existential threats, large organisations have realised that ‘business as usual’ won’t cut it anymore – they need to invest in innovation in order to stay relevant. Traditional, product-based R&D investments often aren’t an adequate means of succeeding at innovation. They often require huge investments of time, money and effort, and significant patience is required before it becomes clear if an idea pays off.
Accelerators, incubators and innovation platforms
Instead of the old ways, a host of answers to this innovation challenge have arisen. Large organisations now turn to hackathons and moonshot programmes, and establish accelerator programmes to try and rapidly evolve their products and services and even establish entire new business lines. And innovation portfolio management has arisen as a specialty, to strategically manage and guide these efforts.
The programmes themselves are inspired by a handful of approaches, often amalgamated into a company-specific methodology with a catchy name. Lean Startup is chief among them, with its laser focus on trying to quickly find a profitable and validated business model with a minimum of effort. Agile based development methods often play a role too, for the efficient way they can deliver code. And – closest to our comfort zone as service designers – Design Thinking imbues the value of a design mindset, and a focus on end users, in the entire package.
What’s the relevance to service design?
So, while it’s clear that startups and large organisations are very different, it’s interesting to us as service designers to see to what extent each of them recognise the value we add, make room for us in their organisations, and adopt our mindset and ways of working.
Putting the public sector, healthcare and education aside, there’s an overwhelming chance that any randomly chosen service designer in the private sector is working in a large corporate and not in an early-stage startup.
This relative dearth of service designers in startups, and to a slightly lesser extent in innovation environments in general, represents a unique challenge and opportunity for our discipline. After all, as service design grows, it should discover new markets, helping to keep us all gainfully employed. And this drive for successful innovation means that opportunities exist for service designers in both environments.
I’ve tackled this challenge of working with start-ups myself over the past three years, and been lucky enough to find opportunities to apply my skills and expertise in what are stimulating, exciting and challenging environments, especially when considered next to typical long term service design engagements, where seeing work through to implementation doesn’t always occur. I’ve also encountered my share of frustrations, and seen where significant barriers existed, which hindered my ability to really fulfil my role.
In this article I’d like to look at some of the apparent clashes between the startup mindset and methodology, and how we as service designers think and work. I’ll then look at how we can adapt our practice and apply it to startups and innovation environments.
A different set of drivers
From size and scale to the things that keep them up at night, startups are fundamentally different to large corporates. Their chief concern is to search for and identify a viable business model, and do so rapidly and efficiently. Only once they have a measure of confidence that they’ve identified one, and have scaled their operations, do they start behaving like a typical organisation. But until that time, they follow a scripted routine.
Contrasts and challenges for service design
The fact that service design is largely unknown amongst startups can be attributed to several factors. But a straight forward explanation is that service design is simply still not well-known in Silicon Valley. It’s there where some of the biggest dot-coms originated as startups and went on to become giants. Their stories became written up in guide books and methodologies which have gone on to inspire today’s startups. With service design having become first established in the UK and Western Europe, and slower to gain traction in the U.S., service designers simply weren’t part of the earliest teams at Dropbox and Linkedin, and are therefore not linked to those success stories.
Several more contrasts between a startup’s mindset, and the service design approach, can be identified:
Product mindset vs. service mindset – While it’s easy to dismiss this contrast as just being about semantics, there is a clear difference in the language and mindset between startups and service designers. Startups employee ‘product owners’ and ‘product designers’, consider ‘product-market fit’, and eventually grow into siloed, product-oriented organisations. This is different to the holistic approach to research, design and implementation of services, as applied by service designers.
Shallow customer understanding vs. deep customer empathy – Lean Startup holds a very simplistic view of customers; it’s primarily concerned with discovering their pains and then offering a solution in the form of a product. Even ‘customer development’ activities – which are intense and create lots of data – don’t create a holistic understanding of the wide variety of customers that the service will eventually have. Furthermore, simple deliverables such as personas are rarely developed. On the other hand, service designers orient themselves entirely towards the customer, and apply a wide variety of research methods to gain a deep understanding – and empathy – for who those customers are.
Simplistic product ‘validation’ vs. a range of prototyping techniques – In Lean Startup, teams carry out ‘experiments’ (tightly focussed user tests, often done online and at scale rather than one-on-one) to validate aspects of their proposition. These can be run as Facebook ads or ‘teaser’ landing pages, and they are considered a success when people demonstrate (purchase) interest in what is being offered – a very one-dimensional perspective. Very little additional contextual information about potential customers is ever derived during a startup's discovery activities. Contrast this to the range of prototyping activities that can be employed by service designers – not just online, but physical ones such as desktop walkthroughs, investigative rehearsal and even paper prototypes – and you’ll see we can learn far more about how a (prototype) service behaves with customers.
‘Product-in-a-vacuum’ vs. a holistic understanding of a service – As touched on before, startups typically have a blinkered approach to developing their ‘product’. Little or no effort is spent on understanding the experience of customers over time – and with all aspects of a service – such as is captured in a journey map. Things that are considered superfluous to core functionality (yet are very important from a user perspective, such as providing customer service) are often ignored or haphazardly addressed farther down the road. Service designers take a different approach of course, design ing and orchestrating a service from a strategic point of view, thereby ensuring better customer experiences. The fundamental notion of service-dominant logic, and the value it assigns to service transactions and a service perspective, is entirely alien to a typical startup.
Solution focus vs. problem focus – Far too often, it seems as if startups spring into life because they’ve found a new, technology-driven ‘solution’ which they want to sell to the market. Despite even Lean Startup’s insistence on ‘problem-solution fit’, I’ve seen start-ups doggedly pursue different variations on their same concept, despite research which showed the problem they thought they were addressing wasn’t even experienced as a problem by their customers. Conversely, service designers thoroughly immerse themselves in understanding problems, before looking to design appropriate solutions. “Love the problem, not the solution”, as the saying goes.
Finding the opportunity for service design
Now with all that being said, you wouldn’t be mistaken for thinking the situation looks bleak for service designers who hope to add value to start-ups. While it can be a challenge to overcome those clashes in focus and mindset, I have found that I can still add significant value with my startup clients. Part of that success comes from having determined how to best position myself.
Successful innovations consist of three essential ingredients: A unique concept, with demonstrable value for customers, underpinned by a viable business model. To identify how a service designer can help a startup achieve all three, it helps to look at which elements are a natural match for our skillset and approach, and which require us to learn new things.
Identifying and developing the unique concept is familiar terrain for us, to which we can apply our proven techniques of ideation, co-creation and prototyping, all informed by research-based insights. Similarly, the question of value can be answered by our ability to apply additional research and prototyping techniques, and then test those prototypes with customers. The last ingredient – developing a sustainable and profitable business model – is less familiar terrain for most service designers, but for those in consultancy settings, and with business design skills, it’s less of a challenge.
Getting your foot in the door
In the following section I’d like to share some advice on how you can best fulfil your role as a service designer working with a startup, or an innovation environment. But first, I’m assuming that you already have your foot in the door at a startup, or somewhere like an accelerator or incubator. Getting in contact with standalone startups is a challenge itself, and something I’ve addressed by running a series of half-day workshops in Europe and Asia, in which I introduce the value of service design to them, through demonstrating our perspectives and tools.
It’s often easier to find employment within an accelerator or corporate innovation environment, where you are provided as a coach to multiple start up teams and paid out of a separate budget, rather than approaching standalone startups. However, I’ve had success in both situations, coaching multiple startups with ING’s accelerator programme in Amsterdam, as well as my current work with an independent blockchain-based startup in The Hague. I’ve even used a Trojan Horse technique, entering a Dutch fintech for a short interaction design assignment, and once inside, convincing them of the value of service design and establishing the role myself.
Five tips for succeeding as a start-up service designer
Once you’ve created the opportunity to work within the unique environment offered by a startup (or in something such as an accelerator), there are several tips I have to increase your impact and bring success to your role.
Learn to be a chameleon – By adapting your language, techniques and skills to this new environment, you’ll blend in and find success more easily. This means being flexible in how you name and describe your activities and even your role – at least at first. You’ll learn that your prototyping and testing experience leaves you well suited to do ‘experiment design’, and your customer research skills mean you can do ‘customer development’ just as easily.
Create a ‘service ecosystem’ with the team – By holding a workshop to create this shared, holistic picture of the service they’re busy developing, you’ll expose them to issues they surely wouldn’t have otherwise identified, and in doing so, effectively introduce your unique mindset and value as a service designer. I’ve written about this visualisation of mine previously (see “Using a Service Ecosystem to Quickly Grasp Complexity” in Touchpoint Vol. 10 No. 2), and it forms a core part of my half-day course for startups. It should also be added that journey maps are also very valuable.
Get comfortable with canvases – Pinning down their value proposition and business model are critical concerns for a start-up, so learn how to create their associated canvasses: the ‘Value Proposition Canvas’ and ‘Business Model Canvas’. In fact, there are handfuls of canvasses and card kits that are all relevant for startups, from innovation and ideation triggers and techniques, to the Platform Design Toolkit and Futurice’s Lean Service Creation methodology. Our existing skills at facilitation and workshop leadership means these are easy to add to our arsenal of tools, and they fit a startup’s needs very well.
Push the service perspective – Encourage the team to break free of the ‘product’ mindset and realise that they’re creating a service. This is partially accomplished by activities such as mapping the service ecosystem and customer journeys, and partially through directly challenging the team to orchestrate their service from a strategic perspective. Have they thought about the role of customer service? And the handoffs between touchpoints and channels (from an app to a website, for example)?
Learn the start-up language – ‘Customer development’, ‘validation’, ‘experimentation’, even ‘Series A financing’... Startups come with a world of new terms, some of which describe relatively familiar activities, and some of which are totally unique. It pays to read the literature and learn their language, in order to best grasp what makes these businesses different, and what role descriptions, activities and milestones mean.
Startups don’t offer the stability of working inside a bank, and nor do they come with the variety of assignments offered by a specialised service design agency or large consultancy. However, their high pressure environments, and the opportunity to make a significant impact by having a strategic role from the very start, makes them a worthwhile and challenging prospect for service designers. And where standalone startups prove too difficult to reach, service designers can still work with them in the fast-growing world of accelerators, incubators and corporate innovation, often offering far more than a shallow ‘Design Thinking coach’ who runs a single workshop and leaves teams to get on with it.
Despite some pretty significant challenges to be overcome in terms of mindset and perspective, an adaptable service designer who’s willing to take some risks and learn a new set of skills can find great opportunities working with startups, just as I have. I hope that what I’ve shared in this article inspires others to move in the same direction.
This article also appears in Vol. 11, № 1 of Touchpoint, a journal published three times per year by the Service Design Network, and providing in-depth coverage of all aspects of the service design discipline.