CHAPTER 3
Design Thinking
● Constant process of trying to find innovative solutions to problems through a deep
understanding and empathy of the target user
● Solution-based approach
● Involves the process of questioning
Principles of Design Thinking
1. Human-Centricity and Empathy
● Providing solutions to problems that focus on human needs and user response
2. Collaboration
● Form a pool of perspectives and ideas
3. Ideation
● Produce many ideas and solutions without first considering the quality
4. Experimentation and Iteration
● Ideas are turned into prototypes, which are continuously tested
5. A bias toward Action
● Solutions are turned into concrete prototypes and tested out in the real world
The Origins of Design Thinking
50s and 60s
● Design thinking emerged due to the collective problem-solving of significant societal
changes
● “The Sciences of the Artificial” states that design thinking is a way of thinking - Simon
1970s
● Began to combine the human, technological, strategic needs, and innovative technology
● First model that consists of 7 major stages
21st Century
● Many variants of design thinking came out with different numbers of stages
The Design Thinking Process
Hasso Plattner Institute of Design at Stanford
● Provided a five-step process
● A non-linear fashion rather than sequential steps
● Strategic to the success of prominent international companies (Google, Apple,
and Airbnb)
1. Emphatize: Research About Users’ Needs
● To obtain an understanding of the people who experience a problem before designing a
solution to serve them
KEY EMPATHY-BUILDING METHODS
1. Empathy Interview
● Find out as much insight as possible using an open conversation
2. Immersion and Observation
● Users are observed in their natural environment to identify users’ needs,
motivations, and challenges
3. Extreme Users
● One sought to restructure the problem and discover fresh insights
4. Ask what, how, and why with curiosity
● Lead the observation into more abstract user motivations
EMPATHY MAP
1. Say
● Cover what the user says in an interview or some usability study
2. Think
● What the user is thinking throughout the experience
3. Do
● The action the user undergoes
4. Feel
● The user’s emotional state
2. Define: State Users’ Needs and Problems
● Find who the user is, what is his needs, and develop insights from the answers
● An actionable design problem statement is defined
● To generate tangible and actionable ideas to solve the problems
GUIDELINES IN GENERATING QUESTION UNDER THE DESIGN THINKING
PROCESS
1. Strengthen the good
● All aspects of the customers’ needs are intensified
2. Eliminate the bad
● All bad components witnessed in the problem are taken out
3. Search the opposite
● Problem are transformed into opportunities
4. Enquiry of the Assumptions
● Consists of enquiring about the assumptions at hand
5. Pinpoint the Unanticipated Resources
● Some resources are not stated by the customer can be sought on how
they can be controlled
6. Form an Analogy
● Includes the manner of creating relationships between the problem at
hand and unconnected images
7. Break down the Problem into Pieces
● Where does analysis come into the picture
3. Ideate: Challenges Assumptions and Construct Ideas
● Designers are prepared to start generating ideas
● “Think outside the box”
NUMEROUS IDEATION TECHNIQUES
1. Brainstorm
● A more relaxed and informal way of solving a problem using imaginative
thinking
2. Brainwrite
● Serial process of asking participants to write down their ideas about a
specific question
● Ideas are passed onto someone else, reads the ideas, and adds new
ones
3. Worst Possible Idea
● Technique where members looks for the worst solution in ideation periods
4. SCAMPER
● Engrossed on the process of discovering unfamiliar and innovative
solutions to problems
1. Subsititute
● Designers look for something to replace that will result in
improvements of concept, product, service, or process/
2. Combine
● A combination of ideas, processes, or products could work best
3. Adapt
● An idea could solve one or more problems
4. Modify
● Exaggerating a solution or problem offers a new insight
● Help in isolating which part is vital
5. Put to another use
● Making the idea or concept works into a different use
6. Eliminate
● Removing ineffective procedures
7. Reverse
● Doing things that are completely against the original purpose
4. Prototype: Start to Form Solutions
● A low-cost, scaled-down, quick-working sample idea for new products
● Experimental to validate ideas and to develop reaction to form more and more
prototypes
BENEFITS ABOUT PROTOTYPING
1. Timely feedback
● Reveals what works for the market or what could not
2. Prompt changes save time and cost
● Early changes reach the designer’s goals earlier with less or no
investment
3. Validation prior to development
● Ensures to build easier what in reality is needed
4. User research and user testing
● To identify potential user and gather ideas to serve them best
TYPES OF PROTOTYPING
1. Low Fidelity
● Consists of paper prototypes
● Focus is the system not the outer appearance
● Becomes ineffective as the product becomes complex
2. Medium Fidelity
● Concerns the product that is made with practical functionalities
based on storyboard and user situations
3. High Fidelity
● Mistaken for the final product
● Provide the most convincing experience of the product having
the real functionalities
5. Test: Try Solutions Out
● Complete product is tested in real life environment using the best solutions in the
previous step.
● Designers can go back to the previous step to make repetitions, adjustments, and
improvements, to consider alternative solutions
The Power of Storytelling
● Stories inspire opportunities, ideas, and solutions.
● Storytelling is an effective tool in designing products and services.
● Storytelling is a vital instrument for feedback..
● Storytelling helps test fresh solutions before committing.
Story Elements
1. Domain/What – Topic or consumer problem to be resolved.
2. Players/Who – Persona representing the consumer; may include support groups or
employees.
3. Story flow/How – Beginning, middle, and end; the problem is the middle stage in the
design process.
Storytelling in the Design Process.
Double Diamond Design Process
1. Understand – Define problem; talk and spend time with people involved.
2. Define – Use understanding to describe the challenge differently.
3. Develop – Offer multiple answers; co-design with diverse people.
4. Deliver – Experiment with solutions; refine the ones that work.
Problem Framing
● This step comes early in the design process that deals with exploring the
problem to know exactly the concern that needs a solution, using storytelling and
qualitative data from consumers.
Solution Framing
● In the solution definition and prototyping stages, storytelling is used to confirm
the efficiency of the solution through two-way communication with the consumer
to know if it really works best.
Solution Implementation
● Storytelling is used as an instrument to discover how the end product is used by
consumers in their everyday lives, with feedback becoming useful for improving
future versions.
Observation and Insights
● Collecting information about the target consumer is a vital part of the design thinking
approach.
● Knowing what customers think or feel is the initial step.
● The first thing to do is not to discover a solution immediately, but to ask a question.
● Most popular techniques to gather insights are observation and interview.
Types of Research
● Generative: Identifies new opportunities and needs.
● Evaluative: Collects and applies feedback.
● Validating: Understands what is currently happening
Curiosity
● Curiosity is the core element in digging deeper into design thinking.
● Curiosity is a mindset that helps in better understanding through observation.
● Curiosity and observation must work hand-in-hand.
Observation
● Observation makes a person look into the finer points.
● Centers on raw data heard and seen excluding interpretation.
● Needs a lot of practice.
Insight:
● Insight is not an idea but helps to produce new idea.
● Interpretation of interesting information.
● Reveals a pattern that identifies needs.
● Swiffer: people do not like washing floor with water.
● Swiffer cleans surfaces easier and conveniently.
Observation Techniques (Spradley’s 9 Dimensions)
● Space
● Actor
● Activity
● Object –
● Act
● Event
● Time
● Goal
● Feeling
AEIOU Framework (by Rick Robinson, 1991)
1. Activity – actions and behaviors with goals
2. Environment – context and characteristics of space
3. Interaction – interpersonal and person-artifact interactions
4. Object – items in the environment and how they are used
5. User – people being observed: their values, behaviors, needs
INTERVIEW
● A tool to identify and empathize with customers needs, ideas, and find new opportunities
● Used to get information about user experience
● Interviewer must be open-minded, skilled listener, observant, flexible and have patience
Interview Techniques
1. Make the interviewee relaxed
- Interviewer should dress in a manner of similar to customer
2. The interview should should be on time and heading in the right direction
- Prepare some scripts as reference to provide focus when asking
3. Concentrate on the customer and not on documentation
- Focus on the conversation to keep conversation flowing
- May bring recorder for everything to be documented
4. Ask open ended questions
- Avoid question answerable by “yes” or “no”
5. Listen, refrain from talking
- Be attentive to what is being said
- Keep questions short and impartial
6. Encourage but not influence
- Avoid saying things that may direct customer into something
- Show little signs of encouragement such nodding or merely smiling
7. Follow one's feelings and drill down
- Make clarifications in order to examine something in depth
8. Repeat to confirm
- Try to reiterate back what the person said
- Any misinterpretation can be corrected
- Difference with the true opinion can be realized and turn into refined answer
9. Thank the customer at the end of the process
- Politely show appreciation for the time and effort given
- A chance for customers to ask questions of their own
Effective Interview Questions for Designers
● Open-ended questions
- type of questions consent people to expand on what is comfortable for them with
restrictions.
- Can be used to discover opportunities, outlook, and the causes.
Types of open questions:
A. Explorative - tries to compel opening out new viewpoints and disclosing
other areas
Ex: How do you find the ambiance of this café compared to others you've
visited?
B. Affective - make known people’s feelings around something
Ex: How do you feel when you spend time alone in this café?
C. Reflective - boost further explanation
Ex: What in your opinion makes a café feel comfortable or welcoming?
D. Probing - question calls for a deeper analysis
Ex: Can you explain how the music or lighting affects your overall
experience here?
E. Analytical - searches for the origin of a problem
Ex: What are the reasons this café might be less crowded than others
nearby?
F. Clarifying - aids in supporting and preventing misinterpretations
Ex: So, that means you prefer this café because it’s quieter and more
relaxing than others?
● Close-ended questions
- Demand for exact answers and most of the time answerable by yes or no
- Sometimes, obliged the respondent to choose an answer from a given set
- Likely center on facts or “wh” questions that are easy to respond to
EXPERIMENT
● Experiment is an approach of approving or disapproving the soundness of an idea or
hypothesis.
● a hypothesis is a statement of assumption that is tested using research and
experiments.
● In the field of entrepreneurship, experimentation is trying something new, observing the
results, getting lessons from the results and trying it over again.
● through experimentation, new innovations, initiatives, ideas and opportunities are
revealed.
Three Types of Experiments,
● Trying out new experiences
- like traveling to other countries, working in different companies, or learning new
skills to help them come up with new business ideas.
● Taking apart products, processes and ideas
- In this type of experiment entrepreneurs try taking things apart and then later
place them back together.
● Testing ideas through pilots and prototypes
- Pilot experiment is a small-scale study directed towards evaluating the viability of
a product or service.
Art and Science applied to Entrepreneurship
ART
● an entrepreneur must have creative thinking skill
● Creativity is the indispensable foundation of ingenuity
Science
● Combines new information into prevailing models, or adding new superior body of
knowledge
● Continually challenge assumptions and constantly makes adjustment to keep up with the
trend
Proper way to make use of the scientific method:
1. Ask a question
● must know his customer
● solve problem of customers
● ask customer if interested to buy particular product or service
2. Research about subject
● source out information through research
● find target audience and discover what interest them (focus group discussion and
existing market research)
● research competitors to differentiate from them with unique value proposition
3. Create a hypothesis
● To formalize assumption
● repetitively test and challenge
● improve hypotheses to come up with an accurate and functional business model
4. Experiment to test hypothesis
● idea is tested
● using simple survey
● presented to a group of beta testers.
5. Assess data and conclude
● Measure results objectively and concretely.
● Draw a clear, data-supported conclusion.
● Review data to refine the outcome.
● Answer the original question or hypothesis.
6. Publish results and call others to expand
● Feedback helps improvement
● Ask customers for input
● Use criticism to refine the product
● No product is perfect
● Keep improving the business
CHAPTER 4
What is a business model?
- A business model is the plan that outlines how a business operates, how it delivers value
to customers, and how it earns money in return.
It answers the questions:
- Who are your customers?
- What do you offer them?
- How do you deliver your offer?
- How do you earn profit?
Different types of business models (TRADITIONAL)
1. Manufacturer
- Makes products from raw materials and sells to distributors, retailers, or directly to
customers.
- Example: San Miguel Corporation (makes food, beverages).
2. Distributor
- Buys products from manufacturers and sells them to retailers or end-users.
- Example: Coca-Cola delivery trucks supplying groceries.
3. Retailer
- Buys goods from distributors or wholesalers and sells them directly to consumers.
- Example: SM Supermarket.
4. Franchise
- A person buys the right to use an existing business model and brand.
- Example: Jollibee franchise in your city.
5. Brick-and-Mortar
- Has a physical location (a store or office) where products or services are offered.
- Example: National Bookstore.
6. Bricks-and-Clicks
- Combines a physical store with an online presence.
- Example: Watsons in the mall + Watsons app.
7. Direct Sales
- Selling products directly to customers without a physical store or a middleman. Often
done face-to-face or through social selling.
- Example: Avon, Tupperware, or your tita selling skincare from home.
8. High-Touch
- Involves strong personal relationships, emotional connection, and customer care.
- Example: Clinics, coaching, personal stylists.
9. Family-Owned
- Run and managed by a family; often passed to future generations.
- Example: Lola’s bakery managed by anak and apo.
Basic types of modern business model
1. Freemium Model
- Offers basic services for free but charges for premium features.
- Example: Canva free vs. Canva Pro.
2. E-Commerce Model
- Selling goods/services directly online.
- Example: Shopee, Zalora.
3. Subscription Model
- Customers pay regularly (weekly, monthly, yearly) for continuous access.
- Example: Netflix, Spotify.
4. Aggregator Model
- Gathers service providers under one brand and delivers through one platform.
- Example: Foodpanda, Grab.
5. Online Marketplace Model
- Connects multiple buyers and sellers; platform earns through fees or commissions.
- Example: Lazada, Carousell.
6. Hidden Revenue Model
- Customers use the service for free, but the business earns from third parties like
advertisers.
- Example: Facebook (you don’t pay, but advertisers do).
7. Data Licensing/Selling Model
- Collects and sells user data or behavioral insights.
- Example: Companies selling analytics to marketers.
8. Agency-Based Model
- Offers specialized services to clients, like design, marketing, etc.
- Example: Digital marketing agency working for multiple businesses.
9. Affiliate Marketing Model
- Earns commissions by promoting and selling products for other businesses.
- Example: Influencers with Shopee or Lazada links.
10.Dropshipping Model
- You sell online without keeping stock; supplier ships directly to customer.
- Example: Shopify sellers using AliExpress.
11.Network Marketing (MLM) Model
- Sells through distributors who recruit others under them.
- Example: Avon, Herbalife, Oriflame.
12.Crowdsourcing Model
- Gathers ideas, services, or content from a large group of people (usually online).
- Example: Wikipedia, logo contests.
13.Blockchain-Based Model
- Uses blockchain tech to ensure transparency, trust, or decentralized control.
- Example: Cryptocurrency platforms like Bitcoin or Ethereum.
14.Low-Touch Model
- Minimal interaction with customers, often self-service and fast.
- Example: Self-checkout counters, online forms.
15.Razor-and-Blade Model
- Main product is cheap, but refills or accessories are expensive.
- Example: Printers (cheap) + ink (expensive).
16.Consulting Model
- Provides expert advice to solve client problems in business, finance, health, etc.
- Example: McKinsey, freelance consultants.
17.Social Enterprise Model
- Business with a mission to solve social issues while being sustainable.
- Example: TOMS Shoes (donates for every pair sold).
18.Nickel-and-Dime Model
- Charges small fees for extra services or add-ons.
- Example: Budget airlines charging for snacks, baggage, seat choice.
Business Model Canvas
Is a simple visual tool that helps describe how a business works and earns values.
1. Customer Segments
Who are your customers?
The different groups of people or organizations you serve.
2. keyPropositions
What value do you offer?
The problems you solve or needs you meet for your customers.
3. Channels
How do you reach your customers?
The ways you deliver your product or message to customers.
4. Customer Relationships
How do you interact with customers?
The type of relationship you build.
5. Revenue Streams
How do you make money?
The ways you earn income from each customer group.
6. Key Resources
What do you need to run your business?
Important assets needed.
7. Key Activities
What must you do well?
The most important actions to make the business work.
8. Key Partnerships
Who will help you?
Other companies or people who support your business.
9. Cost Structure
What are your main expenses?
The major costs to keep the business running.
KEY PARTNERS
● Key partners are suppliers and other entities that help make the business model work
better. Entrepreneurs may partner with businesses, government, or non-consumer
entities to optimize resources, form new streams, or lessen risks—especially important
for startups.
● As the business grows, the needed partnerships also change. A startup’s partners may
differ after five years in operation.
Four Types of Partnerships:
1. Strategic Alliances – Between non-competitors to help each other while staying
independent.
2. Coopetition – Between competitors to share risks and promote their shared industry.
3. Joint-Ventures – Two businesses form a new company for a new market or area.
4. Buyer-Supplier – Ensures a steady supply for the buyer and stable customers for the
supplier.
KEY ACTIVITIES
● Key activities are essential in achieving a company’s value proposition and successful
operation.
● They connect the value proposition to the customer segment and depend on the
business model.
Categories:
1. Marketing – Promoting products/services to create awareness and demand.
2. Sales – Selling and building customer relationships.
3. Design – Creating item designs
4. Development – Developing products/services (e.g., software).
5. Operations – Manufacturing and delivering products/services in quantity and quality.
6. Distribution – Reaching and delivering to customers.
7. Customer Experience – Customer service, consulting, and support.
KEY RESOURCES
● Key resources are the most important assets to make a business model work.
● They help create value, reach markets, maintain customer relationships, and gain
revenue.
Categories:
1. Physical – Tangible assets like equipment, inventory, buildings, and vehicles.
2. Intellectual – Intangible resources such as brand, patents, knowledge, and
partnerships.
3. Human – Employees, especially in creative and service-oriented companies.
4. Financial – Cash, credit lines, and stock options for employees.
CUSTOMER VALUE PROPOSITION
● is a business strategy for generating value by describing why customers should choose
a particular product or service
- Functional Value: products provide convenient solutions that are preferable
compared to alternatives
- Emotional Value: aesthetics and sentiment attached to products can influence
customer preference
- Economic Value: products can offer monetary benefits, save time, or enhance
innovation
- Symbolic Value: products convey social status or responsibility based on brand
perception
DIFFERENT TYPES OF CVP
● All Benefits
- all benefits from a market offering various customer needs, enhancing
satisfaction and loyalty
● Favorable Points of Difference
- differentiates products/services through unique features, addressing customer
preferences better than competitors
● Resonating Focus
- identifies the main improvement areas that provide the highest perceived value to
customers, fostering targeted marketing and customer retention
CUSTOMER RELATIONSHIPS
- various types of interactions and connections that a company establishes with its
customers to retain them and enhance their loyalty
TYPES OF RELATIONSHIPS
● Personal Assistance: direct customer interaction with sales personnel
● Dedicated Personal Assistance: extended, intimate support for individual customers
● Self-Service: tools provided for customer's autonomy
● Automated Services: systems that identify and assist customers individually
● Communities: platforms allowing customers to connect and share experiences
● Co-Creation: involves customers in the product development process, encouraging
customer engagement in designing and innovating products
CUSTOMER SEGMENTS
Definition:
- Customer segments are groups based on shared traits like demographics (age, gender,
ethnicity) or psychographics (interests, spending habits, motivations). Businesses can
target one or multiple segments.
Types of Customer Segments
MNEMINICS: My, New, Shoes, Don't, Match
● 1. Mass Market
- No specific segmentation; broad appeal
- Products used by most people (e.g., aspirin, OJ, soft drinks)
- Example: Refrigerator manufacturers
● 2. Niche Market
- Highly specific needs and characteristics
- Customized products for a narrow audience
- Example: Auto parts suppliers for specific car makers
● 3. Segmented Market
- Slight differences in needs within segments
- Tailored value propositions per group
- Example: Retail banks offering different services based on net worth
● 4. Diversified Market
- Very different customer segments with unique needs
- Profitable to serve all segments despite overlap
- Example: San Miguel Corporation
● 5. Multi-sided Platforms
- Interdependent segments requiring simultaneous service
- Value depends on both sides engaging
- Example: Credit card users and merchants
Channels
Definition:
- Channels are touchpoints through which companies communicate with and deliver value
to customers. They shape the customer experience and influence customer satisfaction.
Channel Phases
MNEMONICS: All, Elephants, Prefer, Delicious, Apples
● 1. Awareness
- Marketing & promotion phase
- Educates customers about the product/service
- Examples: Google, YouTube, Instagram, Facebook
● 2. Evaluation
- Customers compare offerings & form opinions
- Entrepreneur can highlight strengths vs competitors
- Examples: Google My Business, company website, social media
● 3. Purchase
- Actual transaction phase
- Product/service is exchanged for money
- Examples: Stripe, PayPal
● 4. Delivery (Fulfillment)
- Product/service reaches the customer
- Solves the customer's problem
- Examples: FedEx, UPS, USPS
● 5. After-Sales
- Support & customer care post-purchase
- Addresses questions, issues, or feedback
- Examples: Email support, chat platforms (e.g., Messenger)
Types of Channels
● Direct Channels
- Owned by the entrepreneur (e.g., store, website, salesforce)
- Higher control, better customer relationships, higher margins
- Trade-off: Higher cost
● Indirect Channels
- Partner channels (e.g., retailers, wholesalers)
- Faster market reach, lower infrastructure cost
- Trade-off: Lower profit margins
- Example: Winegrowers using wholesalers
Value Proposition Canvas
Developer: Alexander Osterwalder
Purpose: Ensure product-market fit by aligning products/services with customer needs.
Main Components
1. Customer Profile – Understand the target customer
2. Value Proposition – Tailor offering to meet customer needs
Customer Profile
- Create one profile per segment (each has unique needs)
- Based on customer archetypes/personas (introduced by Steve Blank)
- Understand customer jobs, pains, and gains
Customer Gains
Positive outcomes customers seek
● Required Gains: Basic expectations
- Ex: Phone must make calls
● Expected Gains: Standard features
- Ex: Stylish phone design
● Desired Gains: Highly valued preferences
- Ex: Easy syncing with other devices
● Unexpected Gains: Surprises customers didn’t expect
- Ex: Touchscreen functionality
Success Tip: Clearly identify and prioritize customer gains to enhance value proposition fit.
Customer Pains
Problems that prevent or complicate completing tasks
● Productivity Pains: Wasted time or effort
- Ex: Extra steps in the buying process
● Support Pains: Lack of help during or after purchase
● Financial Pains: High costs vs. expected value
● Process Pains: Poor business systems or service flow
- Ex: Long waiting queues
Pro Tip: Understand root causes of customer pains and address them effectively in your
solution.
CUSTOMER JOBS/JOBS-TO-BE-DONE
- refer to the various functional, social, and emotional tasks that customers aim to
accomplish, along with the challenges they face in their personal and professional lives.
TYPES OF JOBS
1. Functional Jobs: everyday tasks customers aim to accomplish
2. Social Jobs: reflect how customers wish to be perceived in social settings
3. Personal Emotional Jobs: relate to the feelings customers seek when completing tasks
4. Supporting Jobs: roles customers take in value creation modalities
● Buyer of Value: engaging in a purchase based on perceived value
● Co-creator of Value: participating in product development or feedback
● Transferor of Value: disposing of products with no further personal value
VALUE PROPOSITION
- articulates how a product or service uniquely addresses customer needs
GAIN CREATORS
- outline how products add value by fulfilling customer needs
PAIN RELIEVERS
- describe how offerings alleviate customer pain points and frustrations
PRODUCTS AND SERVICES
- defined offerings that meet functional and emotional customer needs
THE LEAN CANVAS: A BUSINESS MODEL CANVAS ALTERNATIVE
- A strategic tool that helps entrepreneurs and startups quickly and clearly map out and
test their business ideas on a single page
Ash Maurya
1. Problem
Identify the top 3 problems your target customer faces.
2. Customer Segments
Define your target users and customers, ensure the problems and
customers are clearly connected.
3. Unique Value Proposition
A clear, compelling message about how your product solves the
customer’s problem in a unique way.
4. Solution
Outline the key features or solutions that directly address the listed
problems.
5. Channels
How you plan to reach your customers
6. Revenue Streams
How your business will make money
7. Cost Structure
List the fixed and variable costs to operate the business
8. Key Metrics
Define what you’ll measure to know if the business is succeeding
9. Unfair Advantage
Describe what makes your business hard to copy