A sea turtle lays more than 100 eggs each nesting season, but only a handful will successfully hatch and survive the journey into the ocean. Creating a new business is a little bit like being a sea turtle mom — you want to know your environment and create many versions of your offer to increase your odds of success.

When it comes to making sure those sea turtle babies — I mean, uh, your business ideas — thrive, there are two methods that can help: Design thinking is the approach for discovering which of your eggs has the best chances of survival. Once that baby sea turtle has made it successfully into the ocean, the Lean Startup methodology can improve its chances of successfully reaching adulthood.

During a recent project, a client asked me about the difference between the two methods. While these techniques have been around for years now, it’s a question I hear a lot — many folks in the world of business think they should know the difference, but in all honesty, I don’t blame them for being confused. The methods are distinct, but they can (and should) be used in tandem. Businesses could benefit from them both.

Back to the client question — what’s the difference? I started by explaining the difference between the two methods more broadly, laying out what you see in the chart below.

Both approaches are about building new concepts and products, learning as much as possible from users, and from what’s happening in the market. And both methodologies employ an iterative approach that consistently seeks feedback and understanding from customers in the market.

Knowing the difference is one thing — knowing when to use one or the other is just as important.

Design thinking helps teams come up with many new ideas for new offers they then test before settling on the one that is most desirable, feasible, and viable. When applying design thinking, once we’ve uncovered user needs, we create a slew of options that might solve those needs. Each one is intentionally distinct from the others so we can learn what works best. In visualizing design thinking for our curious client, I sketched something like this (which my colleague Kavya then illustrated for this piece):

On the other hand, the Lean Startup method helps teams drive toward a better version of an existing or new concept. It’s great if you have a product in-market that you want to tweak so it performs better. That end product may vary significantly from the original, but with the Lean Startup approach, you will be able to trace a path from Version A to Version Z. If I were to sketch it, it looks something like this:

Now that we have the two distinct methods visualized, we can look at applying them. A hypothetical challenge: Let’s imagine we’ve been asked to create a new concept to upend the fact girls are called on less, given less teacher attention, and given fewer opportunities to speak in mixed-gender science classrooms.

As design thinkers, our first step would be to talk to girls, boys, and their science teachers. We would talk to psychologists and sociologists. We would explore the mixed-gender education experience in other cultures. After our research, we’d distill our findings into opportunities for improving the classroom experience. For example: How might we immediately reward girls for participating in class? How might we enable teachers to see the disparity?

Based on those prompts, we would brainstorm a slew of ideas. For example: What if classrooms had a voice monitor that recorded the amount of time that boys spoke versus girls spoke? What if there was an online instructor’s portal with exercises for how to draw out girls in every classroom session? What if there was an app that quizzed students who are girls daily to increase their familiarity and confidence with science material?

We would then take this array of ideas and create prototypes — rough, inexpensive, tangible expressions of the new concepts — and test them. Based on feedback, the next round of prototypes might look something like this:

Maybe the voice monitor didn’t affect teacher behavior, but it did sufficiently frustrate the girls in the classroom-so much so that the next prototype was a wall-mounted display to show a live tally of student input. Because of the diversity of ideas and prototypes that come from a design thinking approach, there’s no clear throughline from Version A to Version Z.

Based on knowing that we are now going to build a voice-activated wall display, we would also use design thinking to build and test the accompanying business model and the product’s visual language. We would think about, build, and test options for how the display will get in front of buyers (the distribution channel), who pays for them and how much (the revenue and pricing model), and which entities might help to expedite our success (partnerships). As we explore the most viable business model, we’re still refining the concept.

Once those designs have been sufficiently evolved, we can plan for a limited launch to test the assumptions behind the products. With a refined concept and business model in hand, we can begin in-market testing.

This is when you want to lay 100 eggs, because only a very few will meet the bars for user desirability, the company’s ability to implement it, and the crucial feature of being financially lucrative for the business. In general, using a design thinking approach for a limited launch of a new concept will reduce risk, while using the Lean Startup methodology during in-market refinement will improve the chances of success.

Sometimes, when a team launches a new product but skips the user-centered design process, they find it may be necessary to pivot. That’s a good time for a team to turn to design thinking to explore why the concept isn’t working, and to find new ways to make it meet user needs.

Originally published on November 20, 2020 at https://www.ideo.com. Illustrations by Kavya Singh Barthwal www.kavya-singh.com

Zig, Then Zag: When to Use Design Thinking and When to Use Lean Startup Approach was originally published in The Startup on Medium, where people are continuing the conversation by highlighting and responding to this story.

I asked my students during a class on Business Design at Stanford’s d.school how they might innovate on IKEA’s business. The engineers and scientists’
hands rose immediately.

“Offer interior design services!”
“Launch a more premium brand!”
“Take back old furniture as a way to discount the price of new purchases!”

Great ideas, no? I then asked them to talk through generating a business
model to support one of those proposals. This time, no hands went up. They turned their eyes down and examined the floor.

At IDEO there are people who design in pixels or steel, and then there are
people like me,who model the systems, cash flows, and structures to sustain
such bold innovation.

Designing a business will never be as sexy as creating a shiny new object.
Yet the business system is the foundation upon which those brilliant objects live in the marketplace. And ultimately, the reason they can thrive and change the way we interact with the world.

For those of you who are interested in this variety of design , I’ve put together a cheat sheet for how to (re)design a business model.

1. Break down the problem

Let’s imagine that IKEA was creating a premium line of furniture conceived by guest designers. What questions might you want to ask about that
offering? Well, for starters: who would it serve? How big is the audience these products might appeal to? What kind of premium could IKEA charge for a designer sofa over a Klippan sofa? What extra costs will be incurred for more luxurious fabrics?

At its essence, a business model needs to define who it is serving
(customers), how the offering gets to that person (channel), what unique
value is delivered (value proposition), and how much that value is worth
(pricing).

I always begin by defining what unique value we can deliver to the market. As a human-centered design firm, IDEO sees the opportunity for innovation in who we are designing for. We focus on what users need — the unique value proposition our designs can offer — and then design the business model around that.

2. Create Constraints

OK. Now that you have identified the elements that make up a business
model, or business system, it’s time to frame your problem. How? First
impose some boundaries that define the problem area. “Constraints are
liberating,” says Diego Rodriguez, a partner at IDEO and a mentor of mine. They help you move from blue sky to brass tacks thinking.

In the case of Bean Pole, a Korean clothing retailer, we started by defining
what the brand stood for — delivering high quality, on trend clothing with a
British feel. We used that as a foundation to generate ideas for service
experiences that would deliver on the implicit and explicit brand values.
Without looking at other parts of the business model, we crystalized what was immutable — in this case, the brand attributes — to then inform what was possible in the other parts of the business. Capturing such elements that cannot change are exactly the constraints you’re looking for.

3. Look for Inspiration

The biggest mistake business design students make is to just copy business
models of existing companies, especially those that their innovations seek to supplant. There’s nothing wrong with building a better mouse-trap, but that product will stand out from the pack if it’s supported by a novel business system.

Take Zipcar, which was, in essence, a car rental service. But the company’s
innovative pricing and membership revenue model were wholly different and ultimately disrupted the auto rental industry. Rather than using an existing business model as a template, use it as a starting point. Then, look out to the world for fresh ways that other companies have designed the elements you seek to innovate.

Likewise, Warby Parker could have introduced eyeglasses the way other
designers have — in retail stores with a high markup. Instead, the company
took the best practices of e-commerce — offering customers great prices, free shipping, and returns — to drive purchase and change the paradigm for how eyewear is sold.

4. Bring in Outsiders

My students’ project is around innovating the public school lunch
program in San Francisco. One group’s proposal is for the school to charge
students for take-home meals, to be eaten at home with family for dinner.
That begged the question, how much might people pay for this meal? If it’s
seen as equivalent to dinner in a restaurant, they might pay a lot, but what if dinner out is drive-thru fast food? With a few quick phone calls to the families of the public school kids, my students were able to understand how much they could charge for a meal, and therefore if their big idea could work.

Bringing in outsiders to respond to your ideas is always a good idea. It
refocuses the work on true human needs, challenges the designer’s
assumptions about audience and capturing value, and allows teams to test
and iterate.

5. Begin With Ballpark Numbers

At IDEO, I led a team that was designing a mobile product for a Korean client. We heard from users that they wanted steep discounts, asking for 40 percent and 50 percent of the retail price through the smartphone app. We also knew from our client’s financial statements that there was no way they could sustain a business if they did so.

Rather than burying ourselves in a financial model to try to make the numbers work, we mocked up a few simple interactive prototypes to test with target consumers. Once the product was in hand, we discovered that people were surprisingly quite happy with 10–15 percent discounts. The moral: there’s a great gulf between what people say they want and how they actually behave. Knowing this early in our design process saved a lot of time and allowed us to co-design the user experience and discount thresholds over time.

6. Remember to Design A System

A business system is a series of “if, then” statements — interdependencies.
One design choice influences the next. For example, when Warby Parker
decided to sell exclusively through an online channel, it shaped their
marketing strategy, requiring them to invest in campaigns that made
consumers aware of their offering.

At each stage of design, think through how your choices generate new
assumptions about the interconnected aspects of your business model. Step
back and consider how interconnected pieces work together in a system. As
designers, we aim to create elegant systems — a whole that fluidly connects
the parts.

As I stand in front of my class at Stanford, I’m certain I’m looking at the future Elon Musks and Marissa Mayers. They are going to innovate in radically new ways. But their brainchildren will only make it to market if they are supported by equally incredible business systems. These product designers will build, breakdown and recreate each product scores of times until they have a form that looks natural and obvious. The business designer too will build, test, tweak and refine until she has an elegant and fluid system in place.

With this co-creation of product and business we are left with something so well integrated into our lives that we can’t imagine how we ever managed without it. Surely, these students will offer us our next great product – and business –soon.

illustration credits: Tiffany Chin and Feel Hwang

6 Ways To Design A Business was originally published in IDEO Stories on Medium, where people are continuing the conversation by highlighting and responding to this story.