Business is on a high-speed treadmill. The face of commerce is constantly shifting. Hundreds of millions (~ 300 million) of start-ups are born worldwide every year (granted 2/3 of them fail just as often), and thousands of new products are launched faster than we can say “download”. Many of these offerings are changing the face of well-established industries. Fast Company just came out with their list of The Most Innovative Companies of 2017. Some of the buzziest names on the list (such as Uber, Airbnb and Casper) have barely been around for a decade and yet are disrupting entire industries.

Sharing Economy Marketplace.  Airbnb has disrupted the hotel industry by catering to specific segments of the population: travelers who prefer local and cheaper alternatives to travel accommodations, and hosts who want to make extra money from a spare room in their homes.  By providing a marketplace for these two groups to transact, Airbnb has forced the hotel industry to rethink their long-established strategies.  Uber, too, has disrupted the taxi industry with the same business model. Uber caters to commuters who want an on-demand mode of transportation that is cost-effective, as well as to drivers who want to earn money with their spare time and car. This “sharing economy” business model allows people to monetize their underutilized assets by offering them for use to others.  For example, TaskRabbit connects people who have no time to do chores with people who do.

The disruption of the banking industry has also been spurred by this model. Peer-to-peer lending companies like Lending Club allow individual investors with savings to make personal loans to borrowers, a role that was originally dominated by banks.

There are numerous other companies that fall under this “sharing economy” model: Zipcar (car-sharing that allows customers to rent cars by the hour and has consequently disrupted the rental car industry), Rent the Runway (designer clothes rental service for customers who might want to use a dress for just one occasion), Citibike in NY (or other bike share companies that allow commuters to borrow bikes for short periods).

There are other companies that follow a similar take on the sharing economy business model and allow people to make extra money by selling their unused items (like eBay, or AptDeco).

Direct To Consumer.  Another way industry disruption is occurring is through companies creating direct relationships with customers where there previously was none. Casper, for example, is changing the experience of purchasing mattresses and is taking the US by storm while doing so. It does this by removing the middle man. Instead of going to big box retailers and subjecting themselves to the myriad pains of picking out a mattress, Casper customers can purchase Casper mattresses online, have them delivered to their homes, and try the mattress out for 100 days. Unsatisfied customers can return the mattress for a full refund.

By cutting out the middle man, businesses are changing the way consumers purchase items. More importantly, they are able to control every step of the customer experience. For example, if I bought a pair of sunglasses at Macy’s, the tourists and long check out lines would taint my experience of making the purchase.  However, if I bought a pair of Warby Parker sunglasses (either in Warby Parker stores or online (where I have 5 days to test them out)), Warby Parker removes the random factors that could influence my experience with the brand. Several other companies have followed this Direct to Consumer model. Online class offerings (such as through Khan Academy or Lynda) are disrupting the education industry. In the apparel industry, Bonobos does the same for men’s clothing, and Everlane does so for classic, environmentally-conscious clothing.

Retail Experience.  We are seeing shifts in the retail experience, too. The most significant departure from long check out lines probably started with Apple where geniuses can provide on-the-spot checkout. We are seeing other retailers redesign their customers’ shopping experience. Check out this video about Amazon Go and read how Reformation is revamping the shopping experience.

Physical products.  And of course, we are seeing bold moves in inventing new product categories or rethinking everyday products. We all know how Spanx disrupted the hosiery industry 16 years ago. Then there’s fitbit and other wearable technology that is shaking up the health industry. Thinx is creating waves that could very well stir up the feminine hygiene industry.  Away has created a cost-friendly and well-thought out luggage. And Faraday has created beautiful electric bikes. And this list barely scratches the surface of innovative everyday consumer products that are being launched.

Of course, industry incumbents are not sitting on their laurels. Amazon, one of my favorite companies and #1 on Fast Company’s list, is constantly churning out innovative products. Aside from providing free delivery of goods to members within 2 days, Amazon Prime offers unlimited streaming of videos and music and unlimited photo storage, among other perks. Some of Amazon’s newer offerings include Amazon Fresh, Dash, Alexa, soap.com, and PrimeNow (which offers delivery of household goods within 2 hours)!

So, how then does a company navigate this ever changing landscape to survive, much less, to thrive? How does a start-up dive into this vortex without being swallowed whole?

Enter Design Thinking

What is design thinking? Let me start with what it is not. Design Thinking is not the aesthetics of a product. It is not graphic design or product design.  Rather, Design Thinking, as coined by David Kelley and Tim Brown of Ideo, is a defined process that allows companies to understand customers’ needs and arrive at solutions to effectively address those needs.

• Design Thinking is a process.  That is, Design Thinking entails specific actions or steps.
• Design Thinking is aimed at understanding customer’s needs.  Through observation, interviews and empathizing, companies can define customers’ pain points that the customers may not even realize they have.
• Design Thinking’s ultimate objective is to arrive at solutions to address customers’ needs.  To arrive at an effective solution is a multi-step process that involves ideation, building, testing and iterating.

Design Thinking, therefore, places customers at the core of the strategic process. Without this customer-centric focus, a company cannot thrive. Customers today are spoilt for choice in any category. If they are not immediately satisfied, they can switch allegiances with a single swipe.

Moreover, with technological innovations, we can expect rapidly changing consumer behavior. It is incumbent upon companies to remain abreast of customer needs, and meet the customers where they are. Businesses that have done so, such as the design-oriented companies discussed above, have been able to push the envelope further and develop products that may not have existed before.

This is why Design Thinking is so important. It provides a tool to navigate this evolving terrain. This is what has allowed start ups to take on whole industries. This is what has allowed well-established companies to continue to grow. Companies that have design at its core reflect such imaginative thinking. Their products and services are the ones that we can’t help but gush about.

I plan to explore this topic more in future posts.