The Start-up Impact Framework

DE 7005 Project/Thesis Word: 12628 Miss Dolporn Sereratana MA Design Management 2016/2017 Northumbria University

A Framework for Startup to Create Impact

The Startup Impact Framework.

Acknowledgement I would like to thank Dr. Mersha Aftab Puente for being my cool supervisor for the whole year in studied design management. To got supervision with her really expanding my knowledge, raising my enthusiasm and encourage me to think critically. I confirm that a class with Dr. Mersha is a class of inspiration, enjoyment, and motivation. Second thanks to Elizabeth MacLarty who delivered me a valuable source of knowledge in strategy. The feedback and useful advice from her made me gain progress in learning.

Special thanks to Gilbert Corrales, chief executive officer of Leam. fm, for his generosity to provided knowledge during I did the case study. Had a chance to interview him and to visit his office is one of a great experience in studying in Britain. In addition, thanks to Larry Philip Monster, design innovation consultant, whom I interviewed on semester 1. His talent and passion in entrepreneurship are a fuel to my motivation.

Massive thanks to my classmates for made my learning journey became so enjoyable. To surround by friends with diversity in nation and background really open up my world and hugely inspired me.

Finally, thanks to my parents and my family from Thailand. Their unconditional love is the precious power that drives my determination and supports me to overcome any challenges.

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This paper aims to create a framework for a startup to understand and evaluate the impact of disruption created by a small-scale enterprise by exploring the possibility of design thinking as a tool assist in the framework. Current literature shows evidence that the impact of disruption caused by a startup may results in a positive or negative outcome that in future can affect the small business, therefore, it is essential for a startup to evaluate the impact that the small enterprise will create.

er, one of the processes in design thinking could contribute in conceptualizing the impact, therefore, lead the research to explore its possibility as a tool in the framework.

Qualitative research was used to approach the data by used open-ended questions to interviewed design innovation consultant who got experience in design and entrepreneurship. The main purpose of the interview is to allow the participant to express an opinion in order to develop the frameThe introduction of disruptive innovation has work. altered the way organizations perform business nowadays. By its definition that refers to an innova- The research concludes that design thinking could tion that new entrants capture the low-end market be a tool that assists the framework by bringing that incumbents overlook which later create a new human perspectives and a holistic approach to market and eventually challenged the mainstream help the startup understand and evaluate the imone, is the reason most small business, ‘startup’, pact of its business. In addition, the framework use this opportunity to establish its business. might help startup understand the impact of disSome startups succeed in using disruptive strate- ruption (or the impact of its business) through an gy but however, there is evidence has shown that iterative process of understanding, evaluate, imothers are facing issues such as revenues loss and plement and monitor. high opposition from the public sector that these conflicts may reduce business’s sustained compet- The audience for this paper includes the founder itive advantage. Thus, startups should aware the and team member of startup, entrepreneur, intraconsequences of its operation. preneur, designer, readers in entrepreneurship and startup, readers in design thinking and innovation.

One possible tool that may help startups to understand its consequences is design thinking. Typical Keywords: Disruption, Disruptive Innovation design literature has explained the application of Impact of disruption, Startup, Entrepreneurship design thinking mainly is to understand consum- Design Thinking er’s behaviors and identify human’s needs, howev-

Abstract iii

Content Acknowledgement ii

Abstract iii

Literature Review 15 Introduction 16 Startup & the impact of disruption 19 Negative impact of disruption by startup

Introduction 11 Problem Framing 12 Research Question Research Aim Research Objective Research Approach 13 Personal Individual Objectives

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23 Literature reviews of framework that helps in identify unintended consequences 24 Literature reviews on startup framework and one that could relevant to research 28 Design thinking and startup 29 Literature review summary

Methodology

Discussion & Conclusion

Reflection

35 Introduction

45 Introduction

77 Introduction

36 Research philosophy and paradigm

46 The intention of startup and the importance of disruption for startup

78 Critical reflection on theory

37 Research approach 39 Research design 40 Research Method 43 Research Ethic

49 Startup and the impact of disruption 51 The initial framework 60 The possibility of design thinking as a tool in framework 64 The awareness of startup with the impact 65 The edit of the framework 68 Conclusion

82 Critical reflection on practice 85 Critical reflection on self 87 Recommendation

References 88

Appendices 99

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24 Figure 1 Three Layers of Business Environment (Johnson et al, 2014)

Table of Figures

25 Figure 2 Traditional Market Stakeholders (Lawrence & Weber, 2008) 25 Figure 3 Traditional Nonmarket Stakeholders (Lawrence & Weber, 2008) 26 Figure 4 Examples of Business Model Evaluation (Osterwalder & Pigneur, 2010) 30 Figure 5 The Initial Framework (a) 31 Figure 6 Return Assessment (a) 31 Figure 7 Level of Opposition

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31 Figure 8 Number of Change Enabler

52 Figure 16 Fluid Strategy

31 Figure 9 Customer Satisfaction

54 Figure 17 Lean Strategy Applied by Leaf.fm (Sereratana, 2017)

35 Figure 10 The Research Onion (Saunders et al, 2010) 38 Figure 11 Research Design 40 Figure 12 The Initial Framework (b) 51 Figure 13 Alexander Osterwalder’s Outside-In Analysis 51 Figure 14 The Initial Framework Inside-Out Analysis 52 Figure 15 Strategy As a One Static Event

54 Figure 18 The Reflective Practice Model (English, 2008) 54 Figure 19 The Initial Framework (c) 55 Figure 20 The Exploring Strategy Model (Johnson et al, 2014) 56 Figure 21 The Business Model Environment (Osterwalder & Pigneur, 2010) 62 Figure 22 Diagram of Design Thinking Process (Iterative Cycle) (Curadale, 2013)

63 Figure 23 Diagram of Design Thinking Process (Nonlinear Process) (Curadale, 2013) 67 Figure 24 Risk Assessment 67 Figure 25 Level of change enabler 67 Figure 26 Return Assessment (b) 67 Figure 27 Stakeholder’s Reactions 75 Figure 28 The Startup Impact Framework 83 Figure 29 The Cooperate of the Lean Strategy and The Startup Impact Framework

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01 Introduction Disrupt or get disrupted

Research Question Aims & Objectives

Personal Objectives

How could startup know the impact that they would disrupt?

1.1) Problem Framing This research is intended to explore how Design Thinking can help startups to create impact by aimed to create a framework for startups to assess its business model or transformation. The objective of this research is to created a framework based on literature review and participants’ experiences together with explored the possibility of Design Thinking as a tool within the framework.

nues. Successful stories such as Rent the Runway, a fashion retailer startup that inducted 3.5 million users within four years (Galbraith, 2013) or Blue Apron, the meal delivery startup founded in 2012, reported shipping one million meals per month in 2014 (Shontell, 2015)

Whilst Williams (2011) supports the statements that being disruptive is what startup is particularly best at. However, some evidence shows startup receives negative returns caused by its disruptive performance. Although Uber, the taxi service startup, generated revenues for $6.5 billion in “Disrupt or get disrupted” 2016, the company reported to lost nearly twice of its revenue in 2015 and there are some critics This sentence is what he describes the present still wonder the sustainability of its business modworld as a ‘digital era’, which the internet of things el (Marshall & Davies, 2017) will soon expand dramatically and affect the way people live, The controversy of whether disruption or disrupmaking business, investment or any other activi- tive innovation is been perceived as a positive or a ties in the future. negative force would still continue and most startup would seek to create disruptive impact, howevThe world is moving at a fast pace and business er, it is important for a startup to ensure the imnowadays entail high rapid change. This phenom- pact that they would create should return as profit enon is caused by one of the factor ‘disruptive and sustainable back to its business. As Bainbridge innovation’ or ‘disruptive technologies’, which (1996) suggests false in operating change could creates an impact that alters the way organizations harm the business organization, the statement perform business and change the status quo such raises up questions; what are the indicative factors as human society (McKinsey Global Institute, no of negative disruptions for a startup? Therefore date). Some of the disruptive impacts are caused startup would require a tool or framework that by startups and for them, the impact of disruption would assist in validating the impact and ensure a creates a rapid growth of the business, a massive successful result. amount of users/clients or a huge return of reveWhen John Chambers (Holmes, 2017), executive chairman and former Cisco gave an interview with CNBC’s business reporter, during the conversation he gave one sentence:

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RQ

1.2) Research Question One of a tool that has the possibility to use with the framework is Design Thinking. Brown (2009) explains one of an important role of design thinking is feasibility, ability to understand the possibility of the future, which link to the intent of this research in ensuring positive impact of the future for startup.

Therefore the research question is asking:

“How could Design Thinking help startup to create an impact?�

1.3) Research Aims The problem framing leads to the intention of this research;

1.5) Research Approach

For data collection, the research used qualitative approach by study the relationship of Design Thinking and framework for startup through in1.3.1) To create a framework for startups that terviewed design innovation consultant. At the helps them to assess its business model or transinitial stage, the researcher generated the draft formation. framework analyzed by literature review and used as evidence in the interview, then the researcher asked the participant to express their opinion and 1.4) Research Objectives develop the framework based on their knowledge.

Afterward, the researcher analyzed the data by us1.4.1) To explore the possibility of Design Think- ing inductive approach through identified similariing as a tool in the framework. ties and differences to generate final results.

1.4.2.) To develop a framework base on a literature review for ensuring the impact of disruption.

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Thesis: Creating a framework for startup

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Entrepreneurship & Design

1.6) Personal Individual Objectives

Semester 2 The iterative process of lean strategy

Semester 1 Design value in startup: Design thinking in lean strategy

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My personal development plan is to gain entrepreneurship skill where my goal is to become an entrepreneur who got design skill by using all levels of design; styling, process, and strategy, to enhance business competitive advantage. I chose startup as my subject of study along with my personal learning plan. Since from semester 1 & 2 until now I had learned the knowledge within startups such as the value of design in startup and the application of lean strategy into practice.

This research would be a continuing journey that will fulfill the knowledge I am seeking by doing a research on creating a framework for startup and finally, the outcome will be a tool that I can apply into practice in the future. This is the reason why this research would benefit to my learning plan.

See full pdp in Appendix A

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02 Startup Impact of disruption Design Thinking

Literature Review ESPA Framework Pragmatic Risk Management

2.1) Introduction This chapter reviewed literature that would relevant to the research as Collins (2010) explains reviewing the literature would help the researcher to develop knowledge or resolve a controversy. The literature reviewed mainly focuses on several aspects.

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Secondly, it investigated the negative impact of disruption from startup which leads to raise the problem statement and justify the intention of the research

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Finally, it explored the notion of Design Thinking in order to understand how it could be applied as a tool for the framework.

Firstly, it explored the relationship of startup and the impact of disruption therefore to better in understanding the background of this research topic.

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Thirdly, it explore the framework that help business identify unintended consequences and explored a possible framework that could adapt for this research context in order to identify the idea that may relevant to the thesis.

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Overall aim for this chapter is to justify the choice of the research question and how this literature review frames the thesis which, would be discussed in the summary section.

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2.2) Literature Review 2.2.1) Startup & the impact of disruption To understand the impact of disruption and how it is related to startup, firstly it is important to clarify what is ‘Disruption’?

Netflix is one of disruptive innovation: At first, Netflix initial model does not seem appeal to Blockbuster’s audience. However, As the quality improves it could capture customers that eventually force the incumbent business to bankruptcy in 2010 (Groden, 2015)

Although by its definition, ‘disruption’ could means a problems or disturbance that interrupt the activity or process (English Oxford Living Dictionaries, no date) which view as a negative term, however business in this era is attempting to be a disruptor in order to create a radical change of innovation due to high competitive of business. Williams (2011) explains companies that still only focus on incremental change and still attach to a traditional mindset could eventually fade away from the game. Therefore disruption or disruptive innovations are the popular terms and tools that emerge in business and industry in nowadays.

So what is the word disruption? Where does it start?

Disruption occurs from disruptive innovation or disruptive technologies. Disruptive innovation could be explained in a notion of disruptive technologies proposed by Christensen (2000) where he explains the disruptive technologies are a technology that offers new value proposition in a new market that big firms overlook. Products of this technology are usually cheaper, simpler and more convenient for consumers. Although disruptive

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Image: Victor (2016)

technologies may currently underperform compare to sustaining technologies, however, established companies sometimes provide overmuch needs for customers at a premium price, therefore, open opportunity for disruptive technologies to entry the market and eventually challenge the mainstream one in the future.

For startups, disruption is what this small-scale enterprise is aiming for.

Why? Firstly, it is necessary to understand what is startup and its intent.

The term ‘startup’ could be varied in many definitions. Neil Blumenthal (Robehmed, 2013) defines a startup as a company that aims to solve a problem that is not obvious. While Professor Steve Blank (Shontell, 2014) said startup is an organization that still in search for a scalable and repeatable business model. It could be concluded that startup is a small business that is still in the initial stage (Cambridge Dictionary, no date) Although, it seems that startup could be similar to small and medium-sized enterprises (SMEs), Thanedar (2012) argues that both are different in overall objectives. Startup focuses on huge revenues and scalable potential while SME aims for longevity profit. With the intent to scale, Steve Blank (Pope, 2014) explains further that it is the reason why startups are likely to disrupt; which align with Christensen et al (2015) explanations of disruption as a process that smaller company using fewer resources to challenge the incumbent business.

However, even large companies are also interested in disrupting the game of business as well as startup and both are created the disruptive impact that entirely shakes the economy and society (for this research would only focus on the relationship of startup and the disruptive impact) Back to the first intent to understand the impact of disruption, this kind of impact is created by business organizations that use disruptive innovations or disruptive technologies as mentioned previously.

The impact is obvious that Eric Schmidt (Manyika 2013) gave examples such as technologies that improve medical field, innovations that change the way human manufacture, advancement of computer and upcoming of machines that would replace low-wage workers.

Similarly, there is a report that investigates the impact of disruptive technologies from the same institute (McKinsey Global Institute, 2013). The report reviews in depth information of how disruptive technologies affects society, transforming how people live and work, and economic, affect the economic value on a global scale.

Image Pino & Chacksfield (2017)

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Image Linjer (no date)

Image: Castro (2016)

Image Li (2017)

Therefore the impact of disruption could be seen as changes in society and economy. Looking in startup's lens, the impact of disruption for startup means a rapid growth of business, massive users or huge revenues that challenge traditional business for example Linjer, the luxury watch retailer startup who sell premium watch in affordable price, after launched its business in 2014, it got $1 million pre-orders within one month (Parr, 2017) or Facebook, the social media platform, when it was still a new entry startup, it had created 30 million users worldwide within 3 years since launch in 2004 (Philips, 2007). However, some startup does not count as using disruptive innovation in their business model. For example, Uber, the taxis service, by its business model is not counted as using ‘disruptive innovation’ when measured by Cristensen’s (2000) definitions as it is not entered into any new market. Surprisingly, they create a disruptive impact when it has increased capacity by enabling people to become a taxi driver and result as challenging the oppose incumbents (Chase, 2016).

For this research, it would focus on the disruptive impact despite the business model background or type of innovation.

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Since startup is seeking to create disruptive impact, however, there is evidence that shows the negative side.

2.2.2) Negative impact of disruption by startup Although disruption or its impact may view as positive force that drives innovation, Lepore (Democracy in America, 2014) argues that with the disruptive impact caused by financial industry had resulted in the great recession in 2008. Similarly, in startup, evidence has shown contrary results performed by startups. Two examples of startups are Uber, an online platform that provides user-to-user driver’s service (Noto La Diega, 2016) and Airbnb, an online hospitality service, which would be discussed in the next paragraph.

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Image: King & Stevenson (2015)

2.2.2.2) Uber The startup is founded by Travis Kalanick and Garret Camp who found a problem in taxi service back in 2008, which later became their idea for starting a business that could provide better taxi service (Uber, no date). The business model has shown a sign of disruptive impact when it has expanded capacity by enabling people to become a taxi driver (Chase, 2016) which could be described as ‘ridesharing’ or sharing economy where allow people to become both car riders and users. Despite with its rapid growth and a huge success, the startup has encountered criticism and opposition from government and taxi union (Martin, 2015).

Defillippi et al (2016) had summarized three main challenges of Uber in the list below: a.) Customer’s data privacy b.) The correct legal term of employee c.) Regulation from government and opposition from taxi union

Image: Turkus (2016)

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Especially the fact that the startup is against the current taxi regulation has resulted in a loss of cash in billions for negotiation with the government (Bogost, 2016), which raises a question in critics about the future of the business. (There was a report depicted Uber loss for $2.8 billion in 2015 (Marshall & Davies, 2017)). Defillippi et al (2016) explain it could show that the startup has low attention within their stakeholders such as local government.

2.2.2.3) Airbnb Similar business model to Uber, Airbnb provide service that enables host to use their residence for rent to travelers with lower price compared to hotels, which may disrupt a hotel industry. Despite its huge success, there are challenges of business mainly on the legislative issues in New York City and Germany (and other cities around the world).

The fact that there are lists of illegal residents from Airbnb and controversy of short-term rental is what causes challenges to startup (Somerville & Bellon, 2016). Another serious issue is about the safety of the Airbnb residence. Hill (2015) reported of death cases of customer came to use Airbnb, mainly occur by a low standard of the house rent such as the case of a woman who died from poisoned by carbon monoxide (caused by a heater). Although Airbnb responded to the incident by providing free carbon monoxide detectors to hosts, Stone (2015) still argued that Airbnb should have better in ensuring safety standard within the startup rental.

In summary, the occurrence of negative impact from startup could show that the startup, for Uber case, paid low pay attention between stakeholders (Defillippi et al, 2016) or less understanding of a future scenario, for Airbnb case.

Zak Stone is one of a victim whose his father died when a tree fell on him while staying in Airbnb in Texas (Lieber, 2015)

Image: Stone (2015)

Image: Stone (2015)

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As Bainbridge (1996) explains operating change in an incorrect way could eventually damage the business, this make startups need to know the disruptive impact they would create.

They need to know would that impact benefit or could gradually destroy its business.

Therefore, the problem statement leads to an intention of this research in developing a framework that would help startups assess its business model.

One of a tool that could apply in a framework is Design Thinking as the tool can help the practitioner to understand the possibility of the future (Brown, 2009), therefore lead to the aim of this research in exploring possibilities of design thinking as a tool for the framework.

In the next paragraph would review the literature on a framework that helps in identifying consequences and that could be adapted in startup context and the notion of design thinking and its possibility as a tool for startup.

2.2.3) Literature reviews of framework that helps in identify unintended consequences Recent literature reviews there are some frameworks that been used for designer or organization to consider the future scenarios. The typical framework that assists designers to consider consequences is the socially responsible design, which is the concept that urges designer to consider on environmental and societal impact from the product that they created (Koo & Cooper, 2016).

Tatum (2004) suggests several insights that contribute designer to be better in responsible design such as designer should consider of consequentiality from their product towards an ordinary life of people or consider who will be involved in the design process in the realm of possibilities in different sectors (technological and societal).

For traditional business, although the SAFe criteria are used to evaluate the viability of strategic choice (Johnson et al, 2014), it may share the concept in forecasting the consequences by evaluating through three criteria:

a.) Suitability: Does the strategy exploits opportunities while avoiding threats or weaknesses? b.) Acceptability: Does the strategy meet the expectations of stakeholders? Does the level of risk and return be acceptable? c.) Feasibility: Would the strategy able to apply in practice?

Especially the criteria, acceptability, may show the action of identifying the impact of executing strategy by using sensitivity analysis (what-if analysis) to predict the effect caused by business performance.

All of the frameworks mentioned previously shown an attempt of startup or organization in identify consequences caused by implementation nonetheless, in each element in framework may explore and validate in different aspects. Significant features showed that the design considers the effects on human life and society while the business strategy would validate in an area of profitability.

The literature review on framework could lead the research to explore how this element may apply in identifying the impact of disruption caused by a startup.

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2.2.3) Literature reviews on startup framework and one that could relevant to research One framework that this research could develop is the Ensuring ESPA (ecosystem services for poverty alleviation) Impact framework created by Ecosystem Services for Poverty Alleviation (no date). The framework aims to ensure the impact created by ESPA research project would benefit to people in terms of growth and development.

Two key elements (that may relevant to research) for achieving impact are: a.) Conceptualizing the impact: Within this element, there are three components to conceptualizing the impact; describing change scenarios, identify stakeholders in change scenarios and those who enable the conditions. a.1) Describing change scenarios: Originally in Ensuring ESPA Impact framework (no date) context, this element seeks to understand changes within or between human and the natural system then hypothesize the meaning of change for ecosystem services and poverty alleviation. Possibility for business to understand scenarios change is to understand business environment where consists of three layers; the macro-environments, industry and competitors/markets as describe in figure 1 (Johnson et al, 2014) Although theses three layers are likely to use in understanding the change enablers to organization, it still show some important environment that impact of startup can affect. Therefore, to conceptualize the impact of a startup may achieve through hypothesize what change means for the business environment; macro environment, industry, competitors/ markets.

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Figure 1 Three layers of business environment (Johnson et al, 2014) Politics Economics Social Technological Ecological Legal Potential Entrants Suppliers Buyers Substitutes Competitive Rivalry Strategic Groups Market Segments

The macro-environment Industry Competitors

The organization

Markets

Employees

Distributors, wholsalers, retailers

Stockholders

The organization

Customers

Creditors

Suppliers

Figure 2 Traditional Market Stakeholders (Lawrence & Weber, 2008)

Communities

Governments

General Publics

a.2) Identify key stakeholders: In Ensuring ESPA Impact framework (no date), this element is seeking to identify winners and losers due to the impact of change. In business context, identify key stakeholders could explores these two main types; market and non-market stakeholders as describes in figure 2 Market stakeholders could refers those who share economic transaction with the company directly, while nonmarket stakeholders (figure 3) are those who may not engage directly but could affect business actions (Lawrence & Weber, 2008) a.3) Identify enabling conditions: The Ensuring ESPA Impact framework (no date) explains it is important to identify those change enablers that could stimulate or prevent the change scenarios. Change enablers for business could be similar to the three layers of the environment (Lawrence & Weber, 2008) as mentioned in describing change scenarios element. The business environment would help the organization (such as start up) to identify opportunities and threats.

The organization

Business Support Groups

Activist Groups

Media

Figure 3 Traditional Nonmarket Stakeholders (Lawrence & Weber, 2008)

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Figure 4 Examples of business model evaluaiton (Osterwalder & Pigneur, 2010)

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b.) Reporting, monitoring and evaluation The original ESPA framework (Ecosystem Services for Poverty Alleviation, no date) explains it is important to describe the impact as the project proceeds through reporting, monitoring, and evaluation. Possible evaluation that the framework could adapt is the business model evaluations proposed by Osterwalder & Pigneur (2010) which the assessment use traditional SWOT analysis to assess each 9 components within the business model; customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure (Figure 4 shows examples of business model evaluaiton). The method of assessment may adapt to measure the impact of disruption.

Hirai (no date) proposed a framework for startups to aware of the uncertainty that may threaten the business, so called Pragmatic Risk Management.

The framework may outline as a table consists of seven columns a.) Risk Factor: List all of the possible factors that may harm the business b.) Type: Classified the risk into categories, therefore, to deliver task to the right department. Risks may categorize as market risks, people risks, financial risks, technology & operational risks, competitive risks, legal & regulatory risks and systematic risks c.) Likelihood: Describe the possibility that theses risks may arise, range from low, medium to high. d.) Consequences: Describe what would happen if the risk factor emerges. e.) Mitigation tactics: Identify tactics that may reduce risk f.) Mitigation costs: Consider the cost from implement mitigation g.) Status: Finally identify which mitigation tactic needs to be implemented.

However, there may be some element that might be different from Ensuring ESPA Impact Framework when applying for startups as well as some traditional business framework or analysis may be altered when using in startups context.

Pragmatic Risk Management

Riverdale & IDEO are in a stage of prototyping (Blog@Riverdale, 2009)

Image: Blog@Riverdale (2009)

2.2.5) Design Thinking and startup One of possibility design tool that may help in creating a framework is Design Thinking, which Brown (2009) explains is a human-centered approach helps in generate breakthrough ideas and can be integrated into business and social aspects. For a startup, Jordan (2015) explains Design Thinking is adopted into startups to integrate with lean strategy as Design Thinking is a tool to identify user’s needs and offer a solution while lean strategy allows startup to achieve speed. Verschoor (2015) summarized the design thinking process into 4 stages:

c.) Ideation & prototyping The process of ideation and prototyping is to visualize the design idea by exploring through 4 lenses: c.1) Possibility: what might happen c.2) Plausibility: what could happen c.3) Probability: what is likely to happen c.4) Preferability: what do we want to happen d.) Feedback & evaluation

Especially the process of ideation and prototyping may similar to planning scenario, which may have a possibility of supporting the ESPA framework a.) Immersion & observation: (mentioned in the previous paragraph) in elements The process is to understand the global context of conceptualizing the impact. This led to frame and identifying issues that design could resolve. the research in exploring the possibility of Design b.) Analysis & synthesis: Thinking from being a tool to understand human’s After observe the current issues from step 1, with- needs, to a tool that helps in understanding the in this phase the researcher/designer conclude the consequences. case to generate the design idea.

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Most startups are trying to disrupt, but how are they disrupt?

What impact they have created is what makes them different

2.3) Literature Review Summary

Image: Kelly (2016)

It is no doubt that most startups (or even in big organizations) are attempting to disrupt the status quo as Williams (2011) suggests that for business to gain a competitive advantage in the future is to create unexpected innovation that hard to imitate.

Although disruption and its impact may view as positive strategy, as there is evidence that Uber (been described as a disruptive firm) have to lose huge revenues on negotiating with government and citizens to operate its business (Bogost, 2016) or serious case of death reported in using Airbnb service, therefore it could show that disruption could result in an unexpected results which may harm the startup itself.

entails high risk while Bainbridge (1996) also explains operating a change in an incorrect way could eventually damage the business. Therefore, the mentioned issue had lead to research aim in creating a framework for startups to create impact.

A framework that could adapt into this research is the ESPA Ensuring Impact framework created by Ecosystem Services for Poverty Alleviation (no date) and the Pragmatic Risk Management developed by Hirai (no date). The possible tool that could help in achieving the impact is Design Thinking as one of its processes, ideation, and prototyping refers to planning scenario (Verschoor, 2015) which could integrate with ESPA Ensuring Impact framework. Therefore, lead to defining the If startups have to use disruptive strategy, it means research question of how could Design Thinking they would have to execute positively, which could help startup to create impact.. mean startup need to know the impact that they are about to disrupt. As business transformation

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The existed literature review led to generated the initial framework as shown in Figure 5

Identify Enabling Conditions

Understand change scenarios

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Identify stakeholders in change scenarios

Conceptualizing Impact Business Model

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Create Busines Model

Evaluating Impact

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Monitoring Reporting

Implement

Create the business

Figure 5 The Initial Framework (a)

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Evaluating the impact by: 1. Identify level of opposition 2. Identify level of expense 3. Identify customer satisfaction 4. Identify number of change enabler

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e

Monitor the impact Using the same assessement from step 3

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The initial framework consists of 5 stages: a.) Create business model b.) Conceptualizing impact: understand the change scenarios, identify enabling condition, identify stakeholders and status quo c.) Evaluating impact: predicting the impact by evaluating through these assessments; c.1 Identify level of expense (Figure 6) c.2 Identify level of opposition (Figure 7) c.3.Identify number of change enabler (Figure 8) c.4 Identify customer satisfaction (Figure 9) If the results turn positive; less amount of opposition, less expense on other external factors and more pro table to business, less amount of enabler who prevent the disruption, the process may continue to implement stage If the results turn negative; more amount of opposition, more expense on external factors that may affect the profitability of the business, more amount of enabler who prevent the disruption, then we have to move back to step 1 to fix the business model d.) Create the business e.) Monitor the impact: to check whether the impact is proceeded as what the startup expect by using the same assessment from step 3. This initial framework would be used in evidence for an interview to let participant express their opinion and develop the framework base on their experience.

Government: Does the impact against the government regulaition?

Low/Med/High

Non-government organizations: Does the impact may causes firms to invest in lobbying regulation?

Low/Med/High

Stockholder: Does the impact return profiits to stockholders?

Startup: Does the impact may profitable to business?

Low/Med/High

Low/Med/High

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Figure 6 Return Assessment (a) Level of Opposition Market: Competitors

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Supplier

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Retailer

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Creditor

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Employee

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Communities

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Business Support Group

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General Publics

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Non-Market:

Figure 7 Level of Opposition Number of change enabler

Consumer The impact improve the quality of customer’s life

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The impact ensure customer’s safety

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Figure 9 Customer Satisfaction

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Stimulate change

Prevent change

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Figure 8 Number of Change Enabler

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Although literature had reviewed that some startup such as Uber may not count as using disruptive innovation

when measured by Cristensen’s (2000) definitions, significantly they have created disruptive impact, which could be seen as conflict and protest.

Therefore, for this research, would aim only for the disruptive impact that startups created regardless of what kind of innovation that startup has used.

03 Methodology Research Paradigm Research Philosophy Research Design

Research Method Research Ethics

Research Approach

3.1) Introduction The methodology is the process that shows values and assumptions that influence research decisions (Clough & Nutbrown, 2012) Therefore it is important to explain what assumptions and values are been chose for methodology. This chapter discussed research methodology and to systematically order the reasoning choice, the methodology used the structure adapted from the research onion proposed by Saunders et al (2016) to structure the logic that formulates data collection techniques as shown in figure 10. The methodology discussed on topics below:

a.) Research Philosophy and Paradigm b.) Research Approach c.) Research Strategy and Design d.) Research Method e.) Research Ethics

Research Philosophy & Paradigm Research Approach Research Strategy and Design Research Method

Figure 10 The Research Onion (Saunders et al, 2010)

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The research is exploring on how could Design Thinking help startup to create an impact in order to create a framework for a startup to assess its transformation. The research could be categorized as a research aim to generate knowledge, which would later be used in a practical situation (Collins, 2010).

Epistemology

Constructionism

3.2) Research Methodology 3.2.1) Research Philosophy and Paradigm Research philosophy could be explained as a belief or an assumption about the generated knowledge (Saunders, 2016). Identify research philosophy would formulate the research strategy. Epistemology was used as a research philosophy where it is a study of the knowledge within the particular field of study (Collins, 2010). As this research aims to generate a framework for startup and explore possibilities of Design Thinking as a framework tool, which significantly involved in understanding and developing knowledge, therefore to view the research process in Epistemology lens would help to identify research techniques that help to reach the answer to the question. Another lens that helps researchers view and understand the world is the research paradigm (Collins, 2010). For this

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research, constructionism was used as a research paradigm where constructionism is an alternative view of epistemology that assumes social achievements created by human or interactions (Flick, 2015) similarly to Wisker (2008) who states constructionism believes that human produce knowledge from experience or from relationships of objects, human or events. The reason for choosing constructionism as a paradigm is as situations such as the impact of disruption, economics, and startup is phenomena that affect human to generate knowledge that would useful for that context, therefore, the paradigm, constructionism, would fit with the intention of the researcher.

3.2.2) Research Approach: Creswell (2014) explains research approach is a plan consists of broad assumptions down to detail methods. Generally, research approach categorized into two types; a.) approach of data collection and b.) approach of data analysis (Sudeshna & Datt, 2016)

Data Collection

Data Analysis

For data collection, a qualitative approach would be suitable approach as Trochim (2006) explains it is a thought process of conducting qualitative research where Saunders et al (2016) suggests qualitative research aims to study the relationship of meanings from participants (non-numeral data) to generate theories or framework.

This approach would naturally fit with characteristics of this research because it is about exploring theories and tools, therefore, a study of the relationship of meaning (qualitative approach) may lead to reaching the answer.

In data analysis, an inductive approach was chosen for this research where Saunders et al (2016) explains an inductive approach is an approach that collecting data to explore phenomenon, identify themes then generating a framework or theories. In this research, using inductive approach means the research would explore the phenomenon of Design Thinking in helping startup to create impact in terms of its possibility then would generate a framework for startup. Researchers who use inductive approach would possibly use qualitative data and small samplings (Saunders et al, 2016) therefore with time constraints that there was not much time offer to test the framework, an inductive approach would be a suitable choice.

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k

Interpretated the results

Identified problem through literature review, report and evidence

g

a

Figure 11 Research Design

Recommendation

Reflection

Interview

h

Defined the initial research question

f

b

j

Concluded the results as a creation of framework

Used judgement sampling to select participants

e

Developed the intial framework from literature review

d

Defined the final research questions

c

Searching literature review to justify the position

i

3.2.3) Research Design & Strategy Research Design is a plan to reach the answer of the research. The nature of this research design could be described as both exploratory studies and explanatory studies. Exploratory studies aim to discover phenomenon and gain insights in particular study while explanatory studies attempt to explain the relationship of variables through a study of phenomenon or situation. (Suanders et al, 2016) The research design is coherent to the intention of the research; to explore the possibility of Design Thinking as a tool in the framework, which may relate to exploratory studies and the results could review why Design Thinking may or may not be a possible tool, which could be explained by using explanatory studies.

a.) Identified the problem in startup environment through literature review; report, evidence . b.) Defined the initial research question.

It is important to consider what kind of research strategy would be used as Denscombe (2010) explains research strategy helps in planning an action to achieve a research goal. The Grounded Theory was used as a strategy for this research where is an approach aiming to generate theories or provide new insights, which connected to the research aim (creating a framework for startups to assessing its transformation) and research approach (induction). Undertaking this strategy, researchers should then generate theories by analyzing the data through comparing a new data and an existed one to develop a new set of theories.

f.) Used sampling strategy to select a participant.

For this case, used judgment sampling (will discussed in detail in research method)

c.) Searched existed literature review on the impact of disruption and startup to justify the research positions and searched possible framework and tool that could adapt in the startup context. d.) Defined the final research questions (framed from in depth literature review) e.) Analyzed and developed the initial framework from existed literature review.

g.) Conducted an interview to collect the data h.) Interpreted the results i.) Analyzed and validated the results by comparing with literature review j.) Concluded the results as a creation of framework

Formulating the research design and research k.) Reflected the research and made recommendastrategy helps in developing the research process tion for future study which shown in figure 11. and describes in the list below:

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Figure 12 The Initial Framework (b) Identify Enabling Conditions Identify stakeholders in change scenarios

Understand change scenarios

Conceptualizing Impact Business Model

+ -

Create Busines Model

Evaluating Impact

-

Evaluating the impact by: 1. Identify level of opposition 2. Identify level of expense 3. Identify customer satisfaction 4. Identify number of change enabler

+

Monitoring Reporting

Monitor the impact Using the same assessement from step 3

Implement

Create the business

3.2.4) Research Method

3.2.4.1) Generating the initial framework from the existed literaResearch methods is a process of data collec- ture review tion, analysis and interpretation (Creswell, 2014) As Flick (2015) suggest that constructionism may have a major influence in qualitative research, therefore this research use qualitative method to collect and analyze the data. Overall characteristics of qualitative methods could be described as the list below (Creswell, 2014): a.) Using open-ended questions b.) A method using an interview or observation techniques c.) Analyzing the data through text and images d.) A form of themes and interpretations The research method could be described in details in the next paragraph:

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Firstly, the researcher analyzed and interpreted the literature to form an initial framework as shown in figure 12. The main purpose of generating the initial framework is to use it as a model for the participant to express their opinion and argue base on their knowledge and experience in order to modify and develop the better framework.

See the Mind Map of Literature Review Analysis in Appendix C

Startup Entrepreneurship Design Thinking 3.2.4.2) Sampling strategy The data collection procedures use an interview technique to collect data by use judgment sampling, a sampling strategy that choosing with consideration (Collins, 2010), to select the interviewee. The reasoning choice of using this sampling strategy is to select the right participant who is expert in a particular field and able to provide a real insight into the subject. In addition, using consideration strategy may enhance the reliability of the data by selecting the right person who is eligible in the parameter of the subject study. In this research, the parameter was entrepreneurship’s passion, comprehensive in startup field and design thinking, therefore, a design innovation consultant who also having experience in startup and entrepreneurship was chosen to participate in data collection process. With the experience as a design consultant in startups, the participant would be able to review insight of Design Thinking and able to develop the framework for startups.

Image: Estrattonbailey & Wearesculpt (no date)

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3.2.4.3) Setting interview questions The interview mainly used open-ended questions, which Saunders et al (2016) explain it allows participants to describe a situation or express their attitudes, and probe questions to collect deeper and directive data by asking sub-questions from the open one. For this research, the interview used open question in order to let participants express their perspective and argument around the situation of startup, the initial framework and the possibility of Design Thinking while probe question may require collecting further information.

The style of the interview was a semi-structured interview, which is the type of interview that follows the structure but may allow the researcher to modify the wording, and order depends on the flow of the interview. (Robson, 2011) The data collection phase used the narrative technique by providing social context stories where Collins (2010) explains it provides opportunity to the researcher to observe how actors react to their social experience. Applying the narrative technique to this research, the situation of startup and disruption was been narrated in order to raise opinion

from participants about the issues. The questions were ordered in a sequence adapted from Robson (2011), which could be described in the following lists below: 1 Introduction: explained the research question, research aim, and research objectives.

2. Warm up: explained the situation of startup and the impact of disruption then asked the participant to raise their opinion.

3. Main body part 1: Explained the initial framework in each component then asked participants to develop based on their experience.

4. Main body part 2: Explained the notion of Design Thinking and its relationship with the framework then asked participants for the possibilities of Design Thinking as a tool in the framework.

5. Closure: Asked participants about the awareness of startup for its action.

See full interview questions in Appendix B

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3.2.4.4) Data Analysis Coding was used as a process of analyzing the data which Collins (2010) suggests three types of coding; open coding, axial coding and selective coding. a.) Open coding could be described as a process that categorizes the phenomenon that shown in the data b.) Axial coding is a process of finding connections from the open codes c.) Selective coding refers to part that identifies the core variables from the whole data The analysis process firstly started from open coding to axial coding and to selective coding consecutively.

School of Design

Informed Consent Form: Researcher: Kwan Sereratana Email: dolporn.sereratana@northumbria.ac.uk Contact School of Design via m.aftab@northumbria.ac.uk

About this Research How could Design Thinking help startup to create an im pact?

This consent form is for design innovation consultant who is being invited to participate in the research project titled “How could design thinking help startup to create an impact?”

The research aims to create a framework for a startup that helps in assessing its business model or transformation as well as to explore the possibility of Design Thinking as a tool in a framework.

As a participant, you will be asked to give an interview around the field of startup and to give your opinion on the framework through providing visual data based on your experience. There will be voice recording throughout the project and the interview would take approximately one hour.

All data from the observation and questionnaires will be kept anonymous. Your name will not appear in the researcher’s field notes or the interviews carried out at the end of the study. Furthermore, any recordings made by the researcher will be transcribed, with a coding system being used to identify participants, thus guaranteeing further anonymity.

Information obtained in this study, including this consent form, will be kept strictly confidential (i.e. will not be passed to others), and anonymous (i.e. individuals will not be identified unless this is expressly required and consented to separately in writing).

Data obtained through this research will not be used for purposes other than those outlined above without your separate written consent.

After the whole data had been analyzed, theory triangulation was used to increase validity to this research, which Carter et al (2014) explain it is a method of using various theories or hypothesis to support or argue the finding. The data had been compared to existing literature to identify differences and similarities. Finally, the research generated the theory as a final result.

3.3) Research Ethic Ethics is an important issue that needs to be considered at the beginning of research project by considering participant’s rights and humanity. Informed consent is been used for research ethic with a principle that participants need to be informed before they take part in data collection process (Oliver, 2003). This research had sent the consent form to the participant by informed the scope of activities and process of interview and the process of data analysis. In addition, the participant had been noticed that there would be a voice recorded during the interview. The form confirmed the anonymity of the participant that their name would not appear in the research study.

See full consent form in Appendix C

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04 Discussion & Conclusion

The Framework Design Thinking

Findings

Discussions

4.1) Introduction This chapter discussed the findings, discussions, and conclusion from the interview with design innovation consultant. The interview consisted of 10 open-ended questions that explore around startup, the impact of disruption, the framework and design thinking. Afterwards, data collected from interview had been validated by compared with literature review.

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Their first intent is to look for customer, disruption is more like an effect of it Disruption is important for startup to understand, but at the beginning, it is not

4.2) Findings & discussions 4.2.1) The intention of startup and the importance of disruption for startup 4.2.1.1) Findings The participant explained that in general, a startup is a small-scale enterprise that is searching for a scalable business model. As time passes by, startups might capture the market or provide better product or services than establish corporations, therefore it seems startup is aiming to disrupt the status quo. However, this is the view from an external perspective.

enterprise could generate revenues as fast as possible. Disruption is more like a second effect after captures the consumers. In addition, disruption is important for startups to understand as a fact that they are going to create product or services that different from an established company, therefore, it is important for them to understand the notion of disruption. Nevertheless, at the beginning startup did not aware of the consequence, they just want to create a better experience for Contradictory, looking in an internal view of peo- customers. Therefore, disruption is important as ple who are working in a startup, their first prior- an afterward consideration but at the beginning, ities is to search for a customer so the small-scale to approach customers is the first essential.

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Jennifer Hyman (Carlyle, no date), CEO of Rent the Runway said she want to disrupt the retail industry.

Image: Wortham (2009)

4.2.1.2) Discussions There were two main points that can be discussed according to the previous findings. First is the intention of the startup and second is the importance of disruption to startup.

For the intention of startup, the findings suggest that startup first intent is to search for customers where disruption is a second thought which contrast to existing literature that mentioned in the second chapter suggests by Blank (Pope, 2014) who explains startup is more likely to disrupt.

Similar to what Jennifer Hyman(Carlyle, no date), CEO of Rent the Runway, a fashion renting service startup, said that the intention of her startup is to disrupt the retail industry. While one of the famous startup events use the word ‘Disrupt’ in its name ‘TechCrunch Disrupt’, showing its perception towards startup as a revolutionary game changer (TechCrunch Disrupt, no date).

Although there is evidence that shows most startup is showing an intention to disrupt, there is other evidence that supports the findings from the participant when discussed the importance of disruption towards startup. The finding suggested that at the beginning, the most important consideration for a startup is to search for customer and disruption is just important for them to understand but at the start, it is not.

Similar to what Richard (2013) suggests that to start every business, entrepreneurs should consider what kind of products or services that will fulfill people’s want. While Bridge (2008) proposes that entrepreneur should find the customers in the marketplace or a niche market that business could monetize.

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Secondly, Cristensens et al (2015) suggest that not every disruptive path leads to a success of the business or every successful business does not need to be disruptive. The most obvious example is Uber which, its first intent is to provide a better cab service (Uber, no date) and does not count as disruptive innovation in Cristensen’s (2000) definition however, the startup can generate huge revenues and as consequence seems to create disruptive impact within taxi industry due to its better service. These examples could support what the participant had said that to reach customers is the most important of startups while disruption is more likely an after effect.

term and understand that disruption could similar to some kind of revolution, it could explain that why some startup might say they want to disrupt the industry or use the term to every action that they will do regardless of how true they are understood in the term.

So in conclusion, the intention of startups could depend on each founder’s perspectives. Some may think they are intended to disrupt the industry although how much they truly understand disruption is doubt while others are intended to searching for customers to generates revenues as fast as possible. This could formulate the intention of the framework as a framework aim to evaluate the Additionally, Cristensens et al (2015) suggest that impact whether it is disruptive or not. there are overuse and less understanding of the term ‘disruption’. Disruption is truly meant to However, no matter how startups would declare describe the evolution of the product or services themselves, most important considerations for that start from fringe to mainstream, not mainly startups is to search for customers to capture mardescribes any business that is a low-end upstart. ket while disruption is more like an after effect.

Thus, disruption takes time until it can be recognized. While most people now missed the original

Image: Chapman (2015)

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To aware of the outcome is more like a second thought, when it is important in the ecosystem Because they just want to make money to survive

4.2.2) Startup and the impact of disruption 4.2.2.1) Findings Startups might not concern much about the impact of its business because startup’s intention is to generate revenues. At the first stage, the team must be able to attract customer to pay for their products and services. Until they can expand the market of customer and the business start to have a wide effect in an environment, then startup might start to concern on the impact that they created.

4.2.2.2) Discussion The findings suggest that there are less concern of consequence from startup as a fact that startup mainly focuses on profitability. The answer from participant could similar to what Defillippi et al (2016) had explained that Uber’s problems mainly caused by low attention in stakeholders. Additionally, it is true that startup needs to aim for generating revenues due to the fact that the founder may face financial limit when starting a startup (Spors, 2009). With high pressure in finance and also high risk could really well explain why startups do not have much time to concern the consequences.

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It is more like a fluid strategy and reflective practice I have not seen this with the business model innovation part that they doing this This framework is looking at more intervals and that is the beauty of it

4.2.3) The initial framework 4.2.3.1) Findings The initial framework might assist founders to understand the environment that surrounds startup. The characteristics of the framework could be similar to reflective practice and lean strategy, which they are an iterative cycle of prototyping and learning. From participant’s perspective, the process of the initial framework is an analysis that is not been found in the business model by Alexander Osterwalder. In the business model, it provides an analysis of the environment that surrounds the business by using Porter’s Five Framework (like outside-in, figure 13) while the initial framework is more an analysis of how the business is going to be when implement in that environment (inside-out, figure 14) and additionally, the initial framework provide a continued cycle which it is absent in the current business model.

Organization

Organization

Figure 13 Alexander Osterwalder’s Outside-in Analysis

Figure 14 The Intial Framework Inside-out Analysis

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Figure 15 Strategy As a One Static Event

Figure 16 Fluid Strategy

For example, if Airbnb used this framework in its business, the process could be explained as following steps: After Airbnb created the business model then, they could observe the reaction from the City Council of Rotterdam upon its business. Afterwards, they could analyze and understand their stakeholders and later might create a new business model or, implement the current one. Finally, they could monitor the impact. The participant said this process mentioned previously is quite new.

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Additionally, the participant expressed that the framework is more like a fluid strategy, which allows the business to evaluate their strategy during the time. While most common strategy from the business school is more like one static event where the business executes strategy for just a whole year (figure 15), the initial framework is more fluid which it is seeing time in many intervals (figure 16) and the strategy could have been evaluated as many times within that timeline.

The participant suggested that it is interesting to explore how the initial framework could have been applied by using it in a workshop or create a manual book of it. In addition, the audience that would benefit from using framework apart from startup is the intrapreneurs who have to balance between Another tool that could support the framework a set of strategy from the corporation and agile is using ‘What-if ’ question by question on what process. It is interesting to see how this framework might happen in the environment that the busi- could have been applied in that situation. ness is playing in. Examples of question could be what if the government using regulation that However, limitation in assessing the impact of disagainst the startup? What if the startup gets ex- ruption is the uncertainty by the nature of disruppanding and should they need investment from tion. There are a vast amount of factors that are investors? This process could have a similar func- unpredicted in the future, therefore, create diffition as a risk management, a market research or culties for startups to assess the impact. It is good customer research, which allow startups to be for startups to understand the environment that aware of their action at the beginning. In addition, surrounds them but to assess what is exactly going the framework could be enhancing with a ‘fluid to happen could not be confirmed. strategy’ by seeing strategy as a fluid event rather than a static year.

Therefore, the participant expressed that the framework is a more improvement of Alexander Osterwalder’s business model and Porter’s Five Framework although, not thoroughly as the former.

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4.2.3.2) Discussion The findings revealed several aspects around the framework. Firstly, the participant suggested that the framework sharing similar characteristics with reflective practice and lean strategy. When comparing the initial framework with lean strategy and reflective practice, it is true that they all share similar characteristics (as shown in figure 17-19) which can be explained as a model of an iterative cycle of create-measure-learn-improve.

Project Objectives Learning Plan

External (Clients) Insights

Internal (In House Production) Repeat

Planning

Reflection

Research

Evaluation

Action

Hrpothesis (Brief)

Adapt

Test Observation

Learn

Figure 17 Lean Strategy Applied

by Leaf.fm (Startup Company) (Sereratana, 2017)

Figure 18 The Reflective Practice Model (English, 2008)

Identify Enabling Conditions Identify stakeholders in change scenarios

Understand change scenarios

Conceptualizing Impact Business Model

+ -

Create Busines Model

Evaluating Impact

-

Evaluating the impact by: 1. Identify level of opposition 2. Identify level of expense 3. Identify customer satisfaction 4. Identify number of change enabler

+

Monitoring Reporting

Monitor the impact Using the same assessement from step 3

Implement

Create the business

Figure 19 The Initial Framework (c)

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Figure 20 The Exploring Strategy Model Johnson et al (2014) Environment

Capability

Strategic Position

Purpose

Culture

Business

Evaluating

Corporate

International

Strategic Choice Innovation

Acquisition & Alliances

The participant also suggested that the framework can be described as ‘fluid strategy by seeing a strategy in many intervals of events. Validating with existed literature review, the notion of fluid strategy could be explained by Lawrence Freedman (Canalside View, 2014) who suggest that mostly strategy is perceived as a start-to-end process however in reality, due to uncertainties or unpredictable of things might lead to an unexpected goal therefore, the process needs to be evolved and require modification. This is the reason why a strategy should be viewed as a never-ending process that is fluid and flexible.

Process

Organizing

Strategic in Action Changing

Practice

While Johnson et al (2014) state that strategy is a long-term direction of a company and proposed the exploring strategy model which consists of three main elements; strategic position, strategic choices and strategic in action, (as shown in figure 20) Johnson et al (2014) explained further that typically strategy is measured over years or could be decades for some organization, with the mindset of perceiving strategy in long term, it could relate to what the participant suggested that general business school perceived strategy as one static event contradict to fluid strategy that it is more looking at many intervals of time..

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Figure 21 The Business Model Environment (Osterwalder & Pigneur, 2010) As Neil Blumenthal (Jonikas, 2017), had define startup as a business that searching for a solution that is not obvious and success is not guarantee, it could be said that startup is surrounded with uncertainty, therefore a strategy that suitable for a startup would be a fluid, flexible and agile, not a start-to-end or long term mindset. Hence, it is appropriate for the initial framework to have a structure of an iterative cycle in order to help startup develop the business model better. Additionally, as the initial framework share similar characteristics and concept with lean strategy, a strategy that most startups apply, with the same concept of an iterative cycle of measure-learn-improve, the initial framework raise some possibility as a framework that could be applied in startups.

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The findings suggest that the function of the initial framework is new from the business model by Alexander Osterwalder and Porter’s Five Framework (Industry Forces), which the latter analyze the environment that surrounds the business (outside-in) while the former analyze on the outcome of business when implement in the environment (inside-out). Comparing with the literature review, Osterwalder & Pigneur (2010) propose a business model environment framework (as shown in figure 21) that aims to understand the environment that could influence the organization’s business model.

Understanding changes in the environment may help organizations in selecting a strategic choice.

The intent of the business model environment is related to the participant’s answer and therefore, could prove that the initial framework has a different function from Osterwalder & Pigneur’s (2010) model.

However, although the function of the initial framework is different from the business model environment framework, the former may similar to the SAFe proposed by Johnson et al (2014) and pragmatic risk management (related to the findings that suggested the initial framework could similar to risk assessment) proposed by Hirai (no date). One of the SAFe criteria, acceptability, is examining the expectations of stakeholders to the proposed strategy through explore on three main elements which described in the lists below (Johnson et al, 2014):

The mentioned criteria could cover all of elements that should be consider for assessing impact and could be applied in the initial framework, however, within each elements consists of an in-depth analysis around finance (such as the financial analysis) which, may create excess time for startup as Pozin (2016) suggests agile and speed is the key for startup to success. Therefore, the criteria to use in the initial framework would be a more concise version that aims for startups to understand the whole scenario quickly. Additionally, the pragmatic risk management (Hirai, no date) could be used instead of the three main risk assessment; financial anala.) Risk: concerns the uncertainties that may arise ysis, shareholder value analysis, cost-benefit and due to propose a strategy. There are three main real options, because the former process could be risk assessment; sensitivity analysis, financial ratios faster and help startups understand the whole picand break-even analysis. ture. (see full literature review on pragmatic risk b.) Returns: the benefits that stakeholders would management in chapter literature, page‌) receive as finance. There are four finance assessment; financial analysis, shareholder value analysis, cost-benefit and real options. c.) Stakeholder reactions: the reaction of stakeholder to the proposed strategy.

Risk Returns Reactions 57

+ The findings suggest another tool that could assist within the framework is the ‘What-If ’ question by asking what might happen in the environment that surrounds startups. Osterwalder & Pigneur (2010) explains ‘What-If ’ question is a tool to help an organization create innovation by thinking beyond the status quo. If the ‘What-If ’ question has been used in the framework, it means startup would have to think beyond what could happen due to the impact they created. With the intention to challenge the conventional assumption, using ‘What-If ’ question could drive startups to consider a possible scenario that could happen within the environment. Therefore, the ‘What-If ’ questions could be a tool to assist the framework.

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?

X -

Finally, the findings suggested that limitation in assessing the impact of disruption is the unpredicted future, which is difficult to precisely assess what it is going to happen.

Kastelle (2013) defined uncertainty as an unknown state that difficult to predict its possible outcome or probability. Uncertainty truly different from risk where the probability is less difficult to predict, the former usually emerge in a high complexity environments that many stakeholders involve within, the environment such as the economic. The impact of disruption could be the one that uncertainty arises in that state therefore although the framework may provide an assessment of the impact, is still difficult to assess the possible outcome.

Design thinker may look at a more integrated perspective, a human perspective, a holistic approach Design thinking use methods to communicate better than anyone Could design thinking be a tool to understand the impact? Absolutely

4.2.4) The possibility of design thinking as a tool in framework

4.2.4.1) Findings The participant suggested that design thinking could absolutely be a tool in the framework by bringing human-centered approach or a holistic approach to help a startup to evaluate the impact.

For example, using design thinking to identify stakeholder’s satisfaction instead of customers such as what is the reaction of the government or the city council if the startup expands its business.

If startup only used business approach, it could only focus on factors that they already learned such as trading policies, which in reality, to understand the impact there are many aspects to consider apart from trading policies and therefore design thinking is a tool to help understand different perspectives within the impact.

In addition, the participant suggested that design thinking could be a tool to enhance communication within an enterprise by allows people in a firm to communicate what they see and observe and make the whole team understand and have the same thoughts such as understand the policies of stakeholders or from different perspectives.

Another reason that design thinking tremendously assists the framework is by its nature as an iterative cycle. The process of design thinking is never done therefore keeping the loop of prototyping and learning.

Nevertheless, limitation in using design thinking is how the development of the mindset of a person who is using it, in other words, is the person’s mindset is flexible enough to use design thinking.

Image: Jerena (no date)

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4.2.4.2) Discussion Lockwood (2010) explains design thinking is a human-centered approach that aims to involve consumers, designer and business people in an integrative process. The literature has related to the findings that suggest design thinking could bring human perspectives and holistic approach to assist in the framework. While Glen et al (2015) suggests design thinking is an appropriate tool to understand uncertainty and complex situation unlike to the business thinking which analytic approach often used in a situation that problem is well understood. When facing unpredicted, complex issues where people emerge in particular problem, de-

cision makers could find design thinking is a tool to solve such complexity. According to the statement, it could say that design thinking might help in understand such uncertainty like the impact of disruption. Additionally, although design thinking mainly use in business to identify consumer’s needs (Brown, 2009), according to the findings, with its nature of being a human-centered and a holistic approach, design thinking could help startup to identify stakeholder’s satisfaction or other aspects within impact (as suggested by the participant), which means

design thinking could shift the target from focusing on consumers to focus on other complexity issues.

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Figure 22 Diagram of Design Thinking Process (Iterative Cycle) (Curedale, 2013)

Unmet User Need

Redefine the problem

Understand the user Identify unmet needs

Test learn refine

Design Thinking Process

Prototype

Create Ideas

Design Solution

Therefore, the discussion could support the find- and against, this could be the reason why design ings that design thinking could be a tool to assist thinking provides an effective communication the framework. within the company.

The findings suggest apart from being a tool that brings a holistic approach into the framework, design thinking could enhance communication within organizations by allowing the team to understand in the same directions. Compared with the literature review, Lockwood (2010) explains design thinking creates a culture of collaboration and shared purpose within the organization rather than a culture of performance and competition.

Through open-minded collaboration where everyone in the team accepts every opinion that agreed

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According to the finding, another reason that design thinking could assist in the framework is its nature as an iterative cycle that keeps the loop of prototyping and learning. Verschoor (2015) states that the role of design is to continuously iterate and learning while Curedale (2013) points out the importance of an iterative process is it helps organizations to discover problems earlier and allow the team to improve the process. Figure 22 show the design thinking process.

Understand

Figure 23 Diagram of Design Thinking Process (Nonlinear Process) (Curedale, 2013) Observe

According to figure 22 and 23, the design thinking process is an iterative cycle and nonlinear that allows the user to repeat the process within the cycle.

Using design thinking as a tool in the framework could mean startup could understand the impact and evaluate the reactions and outcome earlier to improve its business models better and better.

Therefore, the iterative cycle of design thinking could be a tool in the framework to assist startup.

Despite the usefulness of design thinking, the findings suggested a limitation in applying design thinking is the mindset of individuals that, they need to be flexible enough to use this type of open-minded thinking. Compared with the literature, Lockwood (2010) states that the mindset of individuals within the team is the main factor that affects the flourish of design thinking in the organization. While there is evidence that shows there are still minority amount of company that adopted design thinking due to most departments such as finance or stakeholders rejects flexible perspectives and demand a proven, analyst data (Martin, 2009) Therefore, the organization or individual’s mindset could be limitations in using design thinking.

Point of View

Ideate

Prototype

Test

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If they become faster aware of things, they can active faster but it is not guaranteed for their success 4.2.5) The awareness of startup with the impact 4.2.5.1) Findings If startup becomes aware of their action, it could help them recognize issues faster and able to act upon faster. Similar to reflective practice which training the mindset to aware of the impact. However, it is not guaranteed for the success of startups. Successful is more like a different lens that requires another action.

4.2.5.2) Discussion According to the findings, to be aware of the consequence is not guarantee for the success of startups. Therefore, it is necessary to check the literature what factors that contribute to success.

Jonikas (2017) suggests that the main competitive advantage that would lead startups to success is to have a strong value proposition, which difficult to be substituted. Additionally, having a strong vision, a great communication skill or ability to adapt to changes also factors that most successful startups are consist of (Prive, 2013). While Hirai

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(no date) suggests one of the reasons that causes failure in startups is lack of response to risk and the successful startups are those that aware of the future consequences and able to manage uncertainty.

According to those mentioned literature, it can be both related and against the findings. It is true that having the strong value proposition is the main reason that helps startups success, however, ability to aware and manage risk are those factors that help the small business from fail. Therefore, successful startups are those consists of wide range of capabilities, including both strong market position and ability to manage risk. In other words, only able to manage risk does not guarantee the success of startup if they unable to find a market position or, unaware of the consequences and risk could cause those strong startups to fail.

4.3) The edit of the framework According to the findings and discussion, there was a slight change of the initial framework (as the participant said the process could help startup). After analyzed the finding, the framework still maintained the original process but had been added with more tool such as the ‘What-If ’ question and the assessment had been edited to cover all of the considerations and more concise for startup.

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a.) The ‘What-If ’ question had been added into the conceptualizing impact process; understand the changes scenario.

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4.4) Conclusion To conclude the results means to answer the research question that we mentioned in the introduction chapter. The research question is:

How could Design Thinking help startup to create an impact?

And the answer is:

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Design thinking can absolutely assist startup to create impact by bringing human-centered perspectives, a holistic approach and a flexible mindset into the framework to help startups understand the external environment and to evaluate the impact of the startup.

The conclusion could be summarized in the following lists below:

1 The intention of startup depends on the vision and mindset of the team but the most important thing for startup at the beginning is to searching for customer while disruption is more like a second thought.

4 Startup would need a quick, concise version of the assessment, as the small business requires agility in their process.

7 Design thinking could shift the target from focusing on consumer’s needs, to understand the complexity of the environment.

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2 Startup is more likely to less concern of the consequence, as at the beginning they need to generate revenue as fast as possible due to financial pressure.

5 Startup would benefit from a fluid, flexible strategy that allows them to learn, improve and iterate rather than the strategy that been seen as a one static event.

3 The initial framework might help startup understand the impact of their business according to the findings and discussion.

6 Another tool that could assist within the framework is the ‘What-If ’ questions by asking the possibility of the outcome within the environment that surrounds startup.

8 Although the framework may provide an assessment to evaluate the impact, but to precisely assess the outcome of the impact (of disruption) is still difficult as it is hard to measure the uncertainty.

10 The process of design thinking as an iterative cycle could support the framework and it is another reason that raises possibility of design thinking as a tool in framework.

12 Factors that contribute to a successful startup are to have a strong value proposition as well as able to respond to risk. Having multiple skills will increase the competitive advantage of the startup.

9 Design thinking could be a tool to assist in the framework by bringing human perspectives, a holistic approach and a flexible mindset to help startup evaluate the impact. A human perspectives could help startup understand the reactions of stakeholders and a holistic approach and flexible mindset could assist in understand complexity and uncertainty.

11 Design thinking could be an effective tool for the team to communicate, as it creates a culture of collaboration and share purpose by let the team to understand different aspects within the impact (such as stakeholders policies) in the same direction.

13 Limitation of using design thinking as a tool is the mindset of individuals or company. The more flexible mindset of individuals, the more flourish of design thinking within the organization.

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Finally, all of the attempts in generating the framework could be explained that

the framework is not something new, but it is an adaptation of strategy to suit the culture of startup by adopted design mindset.

Strategy or framework in nowadays should fit with the fast pace of current business environment. Through creating design culture or adopted design mindset may allow organization explore and understand the environment of high complexity and uncertainty, thus, it is the reason why a company such as startups needs to cooperate the mindset of business and design.

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Finally, we would like to announce the framework called The Startup Impact Framework

Figure 28 The Startup Impact Framework

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A framework for startup to evaluate and create a better impact It is an iterative cycle of 5 steps: a.) Create business model b.) Conceptualizing impact: Predict the outcome of business model through 3 key elements; b.1) Describe change scenario: what will happen when we implement? b.2) Identify key stakeholders: who will affect when we implement? b.3) Identify enabling conditions: who will stimulate or prevent the implementation? c.) Evaluating Impact: Evaluate the impact through these assessments: c.1) Evaluate the level of change enabler power (Figure 25) c.2) Identify risk factor from change scenario (Figure 24) c.3) Identify returns of business (Figure 26) c.4) Identify Stakeholder’s satisfaction (Figure 27) d.) Create Business e.) Monitoring impact: Using assessment from step 3 (evaluating impact) to check whether the impact proceeds under expectation and repeat to the first step to improve the business model.

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05 Critical Reflection on Theory Critical Reflection on Practice Critical Reflection on Self

Recommendtions

Reflection

5.1) Introduction This chapter discussed reflection and recommendation. The reflection reflected following Collins (2010)’s structure of critical reflection in research: a.) Critical reflection on theory b.) Critical reflection on practice c.) Critical reflection on self

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5.2) Reflection 5.2.1) Critical reflection on theory

Disruption may promote creativity The widespread of the term ‘disruption’ has altered the way business performs. Christensen et al (2015) explain the disruptive innovation creates a new business model that differs from an existing one, through provide a cheaper, convenient product and services and eventually challenge the mainstream. The characteristic of challenging the status quo urge new entrants to coming up with a new way of doing business; improve the obsolete, offer new solution, although the business may not a truly disruptive innovation according to Christensen’s et al (2015) definition (to count as a disruptive innovation needs a high requirements).

Balck (2015) suggests disruption raise an opportunity for firms to rethink its business, while Elegem (2015) said with the rapid change of disruption has pushed companies to be more creative in order to survive. Therefore, viewing disruption as a positive force, it promotes firms to come up with new innovation.

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A

B Image: Universal Medical (no date)

Each organization including startups has their own culture and environment. One of culture that becomes more widely used in an organization is the design culture by using design thinking to understand the complexity and identify customer’s needs. However, according to the findings, a flexible mindset is required in order to use design thinking. Therefore, design thinking is not just a problem-solving method or an iterative cycle of prototyping and learning, it is also a way of how we perceive things, how we become more open-minded and embrace ambiguity. It is almost like a personality of individuals and organizations.

Apart from using design thinking to identify customer’s needs, it is interesting to see how design thinking could use in other areas that uncertainty and complexity lie within. Also, it will be interesting to see how big companies balance between the flexible mindset of design thinking and an analytical thinking of a structural business strategy.

Design Thinking is a mindset of the organization 79

C

When comparing a reflective practice, a lean strategy, design thinking process and a fluid strategy, it shows significant similarities that they are an iterative cycle process especially allow users to learn and improve. The way of seeing the process as a cycle could promote culture of learning and help firms to improve better product and services. The cycle could relate to a simple logical thinking that we usually familiar with; plan-create-measure-improve, therefore the simpler of the tool, the more effective performance.

Image: Ansa (2017)

A culture of learning could promote firms to innovate better 80

Strategies should alter and adapt through the evolution of time.

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Image: Redcandy (no date)

Additionally, strategies should be examined whether it is fitted with the current pace of the business world. With the high rapid change that alters the way we do business, some traditional strategy might not able to use with this age. Especially in a startup, it is obvious that the small business requires a new set of strategy that different from a traditional one. However, big companies might need to rethink their current business strategy and requires a new one, as the advance of technology promotes new entrants and with a large amount of newborn business result in a more competitive industry.

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5.2.2) Critical reflection on practice

1

For startup, is not about be a disrupter, is about how can you make customer willing to pay for your idea

Although we mentioned that disruption could promote firms to be more creative, however, reflect in an entrepreneur’s side of view, disruption is not a strict formula that every new entrepreneur needs to follow, as Christensen et al (2015) have said, not every disruptive path lead business to success while Rachleff (2013) explains better products does not need to be disruptive. Disruption is more like a subject that company needs to understand the nowadays worlds and makes company innovate better, but it does not mean every company or new business need to use disruptive innovation. Instead, whether it is disruptive or not, what matters for the new business is does customers are willing to pay for your product and service? Can your business solve customer pain point? Because finally, customers will be the one who will directly affect the business. Therefore, finding the value proposition of the business is the most important, disruption is more like a theory that founders should understand.

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The next challenge of startup is to finding a scalable business model while considering the consequences of its business According to the findings, most startups are unaware of the consequences, as they need to generate revenues as fast as possible. This creates a gap that leads some startup facing several issues during operating its business. If startup able to find a strong value proposition and ability to manage risk, it could create more possibility of success to startup or at least, they would not fail. However, the challenge is they need to manage all of the considerations in a limit of time (as startup needs to be agile) therefore it is interesting to see how startups would apply the startup impact framework within the practice and how is the result coming out. The possible process could result as a combination process of lean strategy with the framework in the same timeline.

Figure 29 The Cooperate of the Lean Strategy and The Startup Impact Framework

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Startup would benefit from combine design mindset with lean strategy

Design thinking could help a startup to create a better innovation by bringing a holistic approach and human perspectives. In addition, both design thinking and lean strategy are an iterative process, therefore, it could interlink to each other. With the flexible environment of a startup, design thinking could flourish within this environment.

Image: FunKids (no date)

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5.2.3) Critical reflection on self As my personal development plan is to be entrepreneur with design skill, I concluded that throughout the whole semester that I had been studying in the field of startup, I found out that I tend to better understand in the area of entrepreneurship and innovation compare to before I took a master degree.

For semester one I had learned the importance of design thinking in assist startup to adapt through changes, then in semester two I got a chance to interview the chief executive officer (CEO) of startup and learned the application of lean strategy. For this thesis, I learned how to create a framework and how design thinking could be a tool that brings a holistic approach and human perspective to help startup understand complexity.

It could explain that my master journey was a continuing timeline of learning, which came in a different aspect of study in each semester and finally they were all formed up together that helped me to prepare for the real world.

1 a.) The integration of design thinking within lean strategy; findings from investigated the value of design in startup during semester one, would be a tool that assists me to collect customer insight and create a product and service that are meaningful to people and business.

2 b.) The application of lean strategy, a knowledge from the interview with the startup, and the knowledge of business strategy; learned through doing case study assignment during semester two, would lead me to know how to apply strategy to enhance business execution and how to operate management process within startup.

3 c.) The framework for startup (final thesis) would assist me in evaluating the impact of the business (when I have started one) by using design thinking to understand a complexity and human perspectives.

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+ Comparing between what I had done before attending the course and after I finished, I do feel changes in myself. From a design practitioner that used to think the design serves only for aesthetic function, now start to understand that design can be applicable in operational and strategic level.

Studied design management had made me believe in a power of design that it can create innovation both meaningful to people and business. It has encouraged confidence and hopes to me.

Yet, there is another valuable knowledge that still absent in my master study.

I think what I had covered is just a theoretical understanding which, to be a successful entrepreneur is to learn from experience, mistakes, decisions, and networks. (Deakins & Freel, 2009). Similar to what Johnson (2011) who is one of Britain’s most successful entrepreneurs had said: “Of course, theoretical concepts are all very well, but what every successful business needs is competent execution�

Therefore, in order to develop a skill such as ability to act upon risk and uncertainty, ability to attract investor, leadership and other useful skills, it could be accomplished only when I establish a business and I believe by learning from the real action it would provide me a valuable knowledge that is hard to find in any classroom.

Although my master course had finished it does not mean my learning journey is over. Actually, it is just started.

Like someone has said, throughout our life, we never stop learning.

That statement is true.

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5.3) Recommendations There were limitations arise from undertook this study. Firstly, Creswell (2014) pointed out the disadvantage of conducting an interview is it may provide mislead information from the interviewee. Secondly, those data collected from the interview was difficult to confirm the application of the generated framework as a fact that it was a theoretical understanding with no proven from the real action. Thirdly, the data came from the participant who is not directly come from startup (in this study the participant is design innovation consultant) therefore there is an absence of individual’s perspective from startup within data.

These mentioned limitations lead to recommendations for further study. Firstly, it is recommended to using abductive approach by testing the framework through design or entrepreneur workshop or to observe the application of framework when it has been applied in a startup. Secondly, it is recommended to interview a participant who is significantly involved in startups such as the chief executive officer or chief technology officer to gain an insight from the real context.

Image: Hasso-Plattner-Institut (no date)

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06

Appendices

Appendix A Personal Development Plan

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Appendix B Interview Quesitons

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Appendix B (Continue) Interview Quesitons

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Appendix C Literature Review Analysis

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Appendix D Consent Form

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Appendix E Participant’s Answer on sheet

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Appendix F Transcript 1.) Do you think startup is intent to disrupt?

So I think startup is searching for a business model that can scale up and as a direct consequence if they are in an industry or market and they are new, they will cause an effect on everyone because they are looking for consumers who are looking at a corporate at first time, and as you can see startup which can do better, can provide a better product and services than a corporation. So in a way, startups are intent to disrupt the status quo anyway.

But does the intention of startup is to disrupt the market? It is different angle, I think for a people who work in a startup they are really looking for ‘customer’ and that is a solely function as a startup because they want to generate income as fast as possible. So I think, yes, the fault behind is to disrupt for example the hotel industry, you really want to provide a better hotel experience, that could be their drive to do something, but I think their intent is to looking for customer as soon as possible. Not to disrupt, that is more like an effect of it or an after effect.

2.) Does ‘disruption’ is important to startup?

I think disruption for a startup is important to understand for a startup because they are going to do something different from a status quo, like establishment business or who are already in an industry. So it is important to know before they are going into a market and to understand it, and would they get more customers? Yes, because for example Airbnb, they cause huge effect on different kind of cities all over the world, and government would not satisfied with it and hotel industry are really disruptive, but in the beginning they have no idea of what they are doing. They just want to have better experience for people who are travelling. So does ‘disruption’ is important to startup?

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I think so in a way as an after thought, but at the beginning, it is not.

3.) Do you think startup usually concern the outcome of their business activity?

I think if is in their vision, for example we want to create a best customer’s experience for someone in a hotel industry, they will think about that kind of vision, but do they concern the effect what is going to cause with their startup? Not so much.

Because they just want to make money to survive, and that just back to at the beginning, if they cannot generate an income, they cannot get food on the table. For example, I see some startup saying that we are going to have an impact on a city of Rotterdam, at first they need to be concern about the customers, because if they can find a customer who is willing to pay, then they can start to think about, alright we are going to have an impact on a city. It is almost like a second-mind. No one is going to pay attention at first but when it is get more customers, yes there will be a concern how can we protect ourselves from the corporation, should they move faster or should they shift their business if regulations is going to against them. It is more like a second thought, when it is going to be important to everyone in the ecosystem.

4.) Do you think these processes (the initial framework) might help in understanding the consequence of disruption?

So what I could understand, if you are looking at a stakeholders or everything around your business model, I think is very good to understand it and it might help the founder to understand what kind of environment that they are working in. So that could be paired, for example, the ‘What-if ’ question, what if we are going to grow big and we need

an investment?, from investors or from parties.

What if the government throwing up regulation towards us? like the hotel industry, restrictions for rooms in the city. So they become an important question for them to understand what is the ripple effect for our startup. Because for startup, if you are working with the forces of government, you cannot control them, you can lobby but you cannot control. So it is more like a risk assessment.

So they can already familiar from the beginning start to talk with for example, a city of Rotterdam, with the city council, my friend speak about what if we are going to expense our Airbnb in your city? What do you think about it right now? Almost like a customer research or market research as well. If they a little bit negative towards you, you are already understand that these are the tension between my startup and the government and we need to focus on it. That could be an option, it might help them to understand consequences of what are they doing.

5.) What method apart from this process might help in understanding the consequence of disruption?

(Already answer in previous question) 6.) What will be limitations in assessing the impact of disruption?

I think is the feels of ‘the unknown’, because you cannot predict everything in the future. Government will change every single 4 years in Holland, city council will change for example Airbnb, maybe their environment and their restriction is coming up. There are so many things you need to think about, so there is only a certain amount of capacity that you might think as a founder. You need to think about your customers, your team, your

investors, so there is a lot of things you need to think about. So I think their limitations on it is almost like everything unpredicted in the future.

It is good to see which environment that we are actually playing as a startup. But to assess what it will really to happen? You do not know, that is the unknown known. So I think for a founder you do not know what is going to happen in one year.

7.) Are there any suggestions that this framework could be improved?

(Looked at the initial framework while answered) So it almost the same again as the lean startup; build, measure and learn. So ‘build, you create a business model, you ‘measure’ and you ‘learn’. So you build something, you prototype, you measure the results, you analyze it, reflect, you learn from it, create, I do not know, it almost works as a prototype, I think that is the intention of this framework. (Look at the initial framework) It is almost like the reflective practice, so I think, as a basis is really great. I can say you can almost form a manual for it like a book or something or you can create a workshop around it. I got no critique on it, I have not seen this with the business model innovation part that they doing this, this part and I also think with the environment analysis you only think about who are the big players?, what are their trends?, those kind of things but you do not really think about when my business model will be implement or will be there, you understand it, you evaluate the impact, you implement and then you monitor and report. It is not as thorough as Alexander Osterwalder’s model, you only analyze it once, the environment impact like porter’s five framework, but it is only looking at like outside-in.

But what if you iterating business model, so you tested it once, for example, you implement it in real life, you go back to what happened? I do not

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think so, is only a momentum and an event with want they do with only analyzing the environment, the forces, the Porters, but is not a continued cycle as far as I know and your model is doing that. So the first business model you need to look again, go through around the process of this, what does the reaction of the City Council of Rotterdam upon the Airbnb model? minus implement it in a real time. Let us go back to understanding our stakeholders, evaluate what they are thinking and have interview with them. Create a new business model maybe and implement it and monitoring. So that is quite new. So I would say I have no critique on it. I would say it is more improvement of the book of Alexander Osterwalder and Porter’s Five Framework because what you are talking about is a higher form of strategy. Strategy is mostly all the time it is just an event, one time in event, and in whole year we just execute, the strategy. Yours is fluid, it is not an event, it is more like a fluid strategy, let us evaluate our strategy is it right or wrong. Look at our assumption and then evaluate, shall we change the strategy again and again? (Wrote on the answer sheet) So it is almost like a timeline, if you go to business school, strategy is one thing and then we execute. Yours is really looking at more intervals and that is the beauty of it because that is fluid.

The business school they think about strategy as an event, once a year. Yours is coming back to more events, plural. I would say it is a very good model because most of the time, they are not saying that as a startup designs a strategy. It is almost thrown like in garbage. A strategy is for corporation, but yours is almost like a milestone of a new business model in between and let reassessed a strategy, which we were set out for the year. So is there any suggestion that this framework could be improved? I think it could be more enhance with a ‘fluid strategy’, since then you got the best of both worlds, I think. A strategy as a fluid event than a static once a year. About the audience of this framework, if you think about the entrepreneur in the corporation, like startups in the corporation, intrapreneur, I think your framework would be very interesting for those entrepreneurs and corporations, who want enterprise more. But they have got this big kind of set strategy for a whole major corporation, and they got these startup

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within they need actually look at the environment that they need to iterate more faster but they need to align their strategy with the strategy of corporation. It is very interesting so I think if it is will be iterate and later on how it will be implement and it is very interesting to see.

8.) Do you think Design Thinking may be a possible tool to help understand the impact of disruption?

I think design thinking again could help what they really are good at, a human-centered perspectives on things. Because if you have got stakeholders and business people actually called them government, like designers are just maybe look at people who create policies so the way for the whole kind of framework of our work against government it is just use design thinking approach to understand what was actually going on with the people at city council? or what are they thinking about? Or what do they most concern about if we will expand our startup in their city? for example, Airbnb. What is going on with them? So very human-centered approach could help them to evaluate the impact of the startup. And for identify customer satisfaction, I think instead maybe it is just stakeholder’s satisfaction in general, if we are expand, are we going to piss off the government or a city council or not? And I think design thinking can really help from that perspective, and if there is integrated approach to it, a whole model, if you got a technologist using this model, they will only maybe look at perception of technology on it. Design thinker or someone who uses deign thinking, maybe looking at a more integrated perspective, a human perspective, on it. A holistic approach, I think if you got only a business approach, then you maybe slightly focus on the things which are already learn about for example, trade-policies, maybe there is something more about trading policies to look at it as an impact. Yeah, I think is a holistic approach that design thinking will bring in the framework.

So it is to look at different kinds of aspects of it. It is really helpful. And also design thinking is also communicates with what you see and what you hear and also what you observed and what you think so I can more see that if I am a founder,

and there is a design thinker, in a team or someone that is actually learn about it, is really good to communicate what you see in the environment of a startup. It is really good to communicating towards a whole team, to get all align about the same thought. Some people are, you know, they need to hear in different ways and I think design thinking uses methods to communicate better than anyone, to get the whole team to understand, maybe the policies of the stakeholders, different perspectives, to let them understand. So do you think Design Thinking may be a possible tool to help understand the impact of disruption? Absolutely. It is align with around faults towards the research and what you have done and also keep them, the loop of prototyping, because it is never done and design thinking is very good to iterate again and again. And I think it would help a team tremendously towards that approach. Not only from the customer’s point of perspectives but different stakeholders.

become more aware what when it will actually happen. So for the first thing is to really conceptualize who are stakeholder and who will have to bring for considerations, and implemented. You really become aware of this kind of stakeholders in the first place and if your startup has real consequences of the stakeholders, I think you are highly to recognize it. Your actions have influence on these stakeholders. So almost you become aware of it so things will happen and I will see faster. So it almost like a reflective practice again, you become more aware of your action first, is almost like training your mindset or your mind, how you see it as well.

So this could be powerful tool to become aware of your startup impact. I think if they become faster aware of things, they can active faster upon an event or an action or consequences. So they can steer very quickly, but it is not guarantee for your success, no. It is like a different lens.

9.) What is limitation of using Design Thinking as a tool?

I think with design thinking first of all, it needs to be, it is almost like a mindset you have with design thinking. And people who use this framework with design thinking mindset they need to be trained in order to use the tool from design thinking perspective. So how well is the develop mindset of the person who using design thinking with the tool. That is the limitation, I think. Is there mind is really flexible enough to use this tool. I think that is the limitation in almost everything, the mindset .

10.) If startup aware of their action, do you think it might help their business to become more successful?

I think for almost with anything, if you become more aware of mind conscious or something, you are already more aware of your actions almost. So anyway, it would help them to understand and to identify the results of their actions more quickly, because they went through the exercise of the iterate circle, maybe first time or second time so they

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Appendix G Coding

1.) The intention of startup and the importance of disruption for startup Examples of Participant’s words They will cause an effect on everyone Startup which can do better, can provide a better product and services than a corporation

Open Coding

Axial Coding

Selective Coding

Disrupt Improve status quo

Want to provide better experience to customer

Startup want to generates revenues

Seeking market First intention

Their intent is to scale their business

Because they are going to do something different from a status quo They are looking for customer But I think their intent is to looking for customer as soon as possible Startup is searching for a business model that can scale up

Making money Scale up their business

Because they want to generate income as fast as possible But in the beginning they have no idea of what they are doing.

Disruption for a startup is important to understand I think so in a way as an after thought, but at the beginning, it is not.

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Not concern of consequence

Disruption is second thought

2.) Startup and the impact of disruption Examples of Participant’s words

Open Coding

But do they concern the effect what is going to cause with their startup? Not so much.

Because they just want to make money to survive

Generates revenues Unaware

Axial Coding

Selective Coding

Not aware of consequence

At first they need to be concern about the customers, because if they can find a customer who is willing to pay But when it is get more customers, yes there will be a concern

Second thought After effect

It is more like a second thought, when it is going to be important to everyone in the ecosystem. then they can start to think about, alright we are going to have an impact on a city.

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3.) The initial framework Examples of Participant’s words

Open Coding

Axial Coding

Selective Coding

I think is very good to understand it and it might help the founder to understand what kind of environment that they are working in.

Help Startup understand consequences

Iterative process

New iterative process of analyzing

So it is more like a risk assessment.

Risk Assessment

Iterative process Enhance with other tool; fluid, what-if

So that could be paired, for example, the ‘Whatif ’ question

What-If Questions

Limitation

Almost like a customer research or market research as well.

Customer research

Further research: workshop

I think is the feels of ‘the unknown’

The unknown

it might help them to understand consequences of what are they doing.

So I think their limitations on it is almost like everything unpredicted in the future So I think for a founder you do not know what is going to happen in one year.

So it almost the same again as the lean startup; build, measure and learn.

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Lean strategy

(Continue) It is almost like the reflective practice,

Reflective practice

I have not seen this with the business model innovation part that they doing this, you do not really think about when my business model will be implement or will be there,

Inside-out analysis Continued cycle

Is only a momentum and an event with want they do with only analyzing the environment, the forces, the Porters, but is not a continued cycle as far as I know and your model is doing that.

Strategy is mostly all the time it is just an event, one time in event, and in whole year we just execute, the strategy.

Yours is fluid, it is not an event, it is more like a fluid strategy,

Fluid strategy Plural events

Yours is really looking at more intervals and that is the beauty of it because that is fluid.

I think it could be more enhance with a ‘fluid strategy’ A strategy as a fluid event than a static once a year.

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4.) The possibility of design thinking as a tool in framework Examples of Participant’s words

Open Coding

Axial Coding

Selective Coding

I think design thinking again could help what they really are good at, a human-centered perspectives on things.

Human-centered perspectives

Effective tool

Effective tool to assist in the framework

So very human-centered approach could help them to evaluate the impact of the startup. And for identify customer satisfaction, I think instead maybe it is just stakeholder’s satisfaction in general ah, I think is a holistic approach that design thinking will bring in the framework. So it is to look at different kinds of aspects of it.

It is really helpful.

Holistic approach Stakeholder’s satisfaction

I think design thinking uses methods to communicate better than anyone, to get the whole team to understand, maybe the policies of the stakeholders, different perspectives, to let them understand

Effective communication

design thinking is very good to iterate again and again.

Iterative Cycle

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5.) The awareness of startup with the impact Examples of Participant’s words

Open Coding

So anyway, it would help them to understand and to identify the results of their actions more quickly,

Aware fast, active fast

Axial Coding

Selective Coding Not confirm for business success

So almost you become aware of it so things will happen and I will see faster. but it is not guarantee for your success, no.

It is like a different lens.

Success is not confirm

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