Byers, T., Dorf, R. C., Nelson, A. J. 2019).

Technology ventures : from idea to

enterprise (Fifth). New York : McGraw-Hill Education. p.163-181
 CHAPTER

Creativity and Product Development

There is pleasure in the pathless woods.
Confucius

How can an organization establish an

CHAPTER OUTLINE
environment that fosters bringing new products
and services to market on a consistent and
8.1 Creativity and Invention
timely basis?
8.2 Product Design and Development
8.3 Product Prototypes
ver the past 20 years, product life cycles

O
8.4 Scenarios have gotten shorter and shorter—in large
8.5 Spotlight on Teva Pharmaceuticals part due to faster technological break­
8.6 Summary throughs. To keep pace with this environment of
rapid change, companies must establish a creative
culture that strongly encourages spending time on
new ideas, concepts, and solutions. The creative
enterprise is based on six resources, which are out­
lined in Table 8.1. Creative ideas, concepts, and
solutions are turned into products and services
through the product design and development pro­
cess. This process is concerned with the concrete
details that embody a new product or service. Pro­
totypes are models of a product or service and can
help a new technology venture to learn about the
right form of the product for the customer. Sce­
narios are used to create a mental model of a pos­
sible sequence of future events or outcomes. Good
product development relies on the five practices
listed in Table 8.5. ■

163
164 CHAPTER 8 Creativity and Product Development

TABLE 8.1 Six resources for a creative enterprise.

■ Knowledge in the required domain and ■ Motivation toward action
fields and knowing what is new
■ Opportunity-oriented culture and
■ Capability to recognize connections, openness to change
redefine problems, and envision and
■ Contextual understanding that supports
analyze possible practical ideas and
creativity and mitigates risks
solutions
■ Inventive thinking about the problem in
novel ways

8.1 Creativity and Invention

Creativity is the ability to use the imagination to develop new ideas, strategies,
business models, or solutions. Creative thinking is a core competency of most
new ventures, and entrepreneurs strive to have creative people on their team.
Creative ideas often arise when creative people look at established solutions,
practices, or products and think of something new or different. These creative
ideas enable invention and innovation. Thus, firms committed to innovation
must fundamentally strive to encourage and support creativity. This section
examines several outstanding ways of understanding creativity.
The creative enterprise is based on six resources as shown in Table 8.1
[Sternberg et al., 1997], To create something new, one needs knowledge of the
field and of the domain of knowledge required. Domains are areas such as
science, engineering, or marketing. Fields within a domain might be circuit
design or market research.
Creativity requires the ability to see linkages between opportunities, rede­
fine problems, and envision and analyze possible practical solutions. Creative
people use inventive thinking that reflects in novel ways on a problem. A cre­
ative thinker is motivated to make something happen and is open to change.
Finally, the creative person understands the context of the problem and is willing
to take a reasonable risk. The person who has most of these skills is often called
intuitive-, that is, he or she has an instinctive ability to perceive or understand
relationships, ideas, and solutions.
One process of creative thinking is shown in Figure 8.1. The entrepreneur
begins by seeking to describe the problem, taking time to validate his or her un­
derstanding through an incubation period of observation and study. Then, brain­
storming is used to generate tangible ideas and insights that can be evaluated and
tested. Finally, a prototype is built and shown to the potential customer. This
process may lead the entrepreneur to revise the question or problem and to begin
a second cycle through the process. This continues until the entrepreneur is con­
fident that the resulting prototype is capable of addressing the user’s core needs.
Creativity often involves associational thinking. Associational thinking is
the ability to connect seemingly unrelated information or ideas and to create
 8.1 Creativity and Invention 165

FIGURE 8.1 Creativity process.

value out of the novel combination. Four key actions can trigger associational
thinking: Questioning, observing, networking with diverse others, and experi­
menting [Furr and Dyer, 2014].
Although daunting to a small entrepreneurial team seeking innovation, it is
useful to view promoting creativity as akin to assembling multiple personas.
Each persona has its own skills and points of view. The first three personas
occupy learning roles: the anthropologist observes behaviors and develops a
deep understanding of how people interact with products, services, and each
other; the experimenter prototypes new ideas continuously; and the cross­
pollinator explores other industries and settings and borrows relevant ideas
from them. The next three personas occupy organizing roles: the hurdler de­
velops a knack for overcoming and outsmarting potential obstacles; the col­
laborator helps to bring diverse groups together; and the director gathers and
inspires the team. The last four personas occupy building roles: the experience
architect designs compelling experiences that go beyond mere functionality;
the set designer transforms physical environments to facilitate the work of
innovative team members; the caregiver anticipates and attends to customer
needs; and the storyteller conveys a compelling narrative about the project
[Kelley and Littman, 2005].
Figure 8.2 illustrates the “Innovation Engine,” which shows how different
internal and external factors can work together to enhance creativity. The three
166 CHAPTER 8 Creativity and Product Development

FIGURE 8.2 Innovation Engine.

factors on the inside of the Innovation Engine are knowledge, imagination, and
attitude. Knowledge provides the fuel for one’s imagination. Imagination, in
turn, is the catalyst for transforming knowledge into new ideas. Finally, attitude
sets the Innovation Engine in motion. The three factors on the outside of the In­
novation Engine are resources, habitats, and culture. Resources include the as­
sets in an entrepreneur’s community. Habitat is the physical space, constraints,
incentives, and team dynamics that surround the entrepreneur. Finally, culture
refers to collective beliefs, values, and behaviors in the entrepreneur’s commu­
nity [Seelig, 2012],
An entrepreneur can improve all six factors to increase innovation. Imagina­
tion can be enhanced by reframing problems, connecting ideas, and challenging
assumptions [Seelig, 2012], For example, in 1954, Kay Zufall was looking for
new things for children to do. She did not like the modeling clay sold for children
because it was too stiff. However, her brother-in-law made a doughy mixture for
cleaning wallpaper. Zufall tried it as a modeling medium and discovered it was
soft and easy to mold and cut up. She and her brother-in-law reformulated it as a
safe and colorful product for children, and they came up with the name: PlayDoh
[Sutton, 2002],
A powerful method for enhancing the imagination is brainstorming. In a
brainstorming session, diverse people come together to generate new ideas
through conversation and interaction. Creative solutions emerge as team mem­
bers integrate different perspectives [Harvey, 2016], Brainstorming sessions
typically require significant planning, setup, and follow-through. Table 8.2 lists
eight guidelines for effective brainstorming sessions.
The mindset of the brainstorming group is particularly important. To be ef­
fective, teams should follow certain brainstorming “rules,” as listed in Table 8.3.
Entrepreneurs can be naturally inclined to judge ideas immediately, leading them
to filter the ideas that they discuss and record in a brainstorming session. The
point of a brainstorming session, however, is to stir the imagination in order to
generate new ideas. Some firms, like the product-design firm IDEO, post
 8.1 Creativity and Invention 167

TABLE 8.2 Guidelines for effective brainstorming sessions.

Right people A brainstorming group should be diverse, relatively small, and free
of internal politics.
Right challenge A brainstorming group should focus on a clearly stated challenge.
Right mindset A brainstorming group should adopt a creative and generative
mindset, saving idea evaluation for the end of the session.
Right empathy A brainstorming group should focus on understanding the people
who are affected by the challenge.
Right stimulus A brainstorming group should use questions that question
assumptions, consider extreme cases, employ analogies, and
explore technology scenarios and trends.
Right facilitation A brainstorming group should ensure that everyone participates,
while keeping the conversation fresh and energetic.
Right follow-up A brainstorming group should have some way to ensure that ideas
can later be considered and, where appropriate, implemented.
Source: Liedtka, J., & Ogilvie, T. (2011). Designing for Growth. Columbia Business School Publishing.

TABLE 8.3 Brainstorming “rules.”

Defer judgment Don’t confuse idea generation, where brainstorming
excels, with idea evaluation
Capture all ideas Even ideas that seem irrelevant or “bad” can be the
basis of other ideas
Encourage wild ideas Wild ideas can lead to insights
Hold one conversation at a time Listen to other people in the group
Build on other people’s ideas Consider how you might modify or extend an idea into
a new idea
Be visual Use pictures and diagrams, not just words, to capture
ideas
Go for volume Emphasize quantity over quality
Source: Seelig, Tina. inGenius: A Crash Course on Creativity. NewYork: HarperCollins Publishers, 2012.

printouts of the brainstorming rules in Table 8.3 in their work environments to

remind team members of this goal.
Entrepreneurs also can act to enhance parts of the Innovation Engine be­
yond imagination. For example, an entrepreneur can enhance her knowledge of
a market by engaging deeply with potential customers through conversations
and observations. Entrepreneurs also can work to apply their knowledge across
different domains. For example, Tina Seelig completed her Ph.D. in neurosci­
ence at the Stanford University School of Medicine. Soon after she completed
168 CHAPTER 8 Creativity and Product Development

her degree, she decided that she wanted to enter the world of business. Though
neuroscience and business may seem very different, Seelig realized that her
ability to do scientific research was directly applicable to the kinds of problems
that she would face in the business world; even though Seelig did not have a
degree in business, she did have highly relevant knowledge. Research shows
that teams that include problem solvers from disparate but analogous markets
outperform teams in which members all have expertise in the target market
[Franke et al., 2013].
An important part of attitude lies in maintaining a willingness to experi­
ment and the drive to push through challenges to solve problems. Research
shows that the human mind is malleable and that people who maintain a posi­
tive and learning-oriented attitude have different brain activity than people
who do not.
Finally, habitat plays an important role in facilitating creativity. Part of
habitat is the physical environment itself. Many startups feature brightly col­
ored and open spaces with easily movable furniture, whiteboards, and even
games. These physical environments support creativity by encouraging infor­
mal interactions and by providing an easy way to capture and share key in­
sights and ideas.
Habitat also includes incentives and team dynamics. All firms need a cul­
ture that promotes a creative process that enables team members to engage and
interact with new solutions. The leaders of a new venture can play a particu­
larly important role in establishing this culture; firms with leaders who em­
power employees experience greater creativity [Zhang and Bartol, 2010].
Leaders also should work to establish a collaborative culture around creativity.
Collaborative teams are more likely to achieve creative breakthroughs, since
they can draw upon multiple perspectives, and they are less likely to have very
poor outcomes, since groups typically have a more rigorous selection process
[Singh and Fleming, 2010],
Entrepreneurial leaders influence the culture by putting in place rules, re­
wards, and incentives that can foster innovation. Even those employees who are
not in a leadership role that has direct control over the corporate culture can in­
directly influence the culture by reinforcing other parts of the Innovation Engine.
For example, by increasing their use of imagination, they might recognize op­
portunities that can ultimately affect the entire organizational culture.
Table 8.4 conveys several ideas for managing and leading in a creative
work environment. These ideas can clash, however, with conventional man­
agement practices [Sutton, 2002]. A natural conflict exists between managing
for creativity or exploration on one hand and implementation or exploitation
on the other hand: New ideas and inventions depend upon creativity; bringing
these inventions to market, however, may require routine processes [Freeman
and Engel, 2007], A small, emerging firm can accommodate both tendencies
within it. As a firm grows, it needs to build a culture that reinforces the best
qualities of creativity as well as efficient execution of its business processes
[Brown and Duguid, 2001],
 8.2 Product Design and Development 169

TABLE 8.4 Conventional versus creative management practices.

Conventional practice Creative practice
Hire people who are “fast learners” of the organizational Hire people who are “slow learners” of the organizational
code. code.
Hire people whom you like and feel comfortable with. Hire those you may dislike, and who make you feel
uncomfortable.
Hire people you need. Hire people you probably don’t need.
Recruit and screen new employees using job interviews. Get new ideas through interviewing people.
Stress importance of paying attention to and obeying Stress importance of ignoring and defying bosses and
bosses and peers. peers.
Locate happy people and make sure they don’t fight. Locate happy people and encourage them to fight.
Reward success and penalize failure and idleness. Reward success and failure and penalize idleness.
Plan something that will most likely succeed, and Plan something that will most likely fail, then convince
convince everyone success is guaranteed. everyone success is guaranteed.
Consider logical or practical ideas, and plan to do them. Consider unrealistic ideas, and plan to do them.
Cater to people who will analyze and support the work. Stay away from, divert, or bore anyone who just wants to
discuss money.
Take advantage of the knowledge of people who have Ignore the advice of people who say they have faced the
faced the same problems you face. same problems you face.
Duplicate the previous successes of your company. Forget about any past success by your company.
Courtesy of Sutton, Robert. Weird Ideas That Work. 2002. Simon and Schuster, New York City.

8.2 Product Design and Development

One of the early tasks of a venture is the design and development of the new
product. The entrepreneurial team wants to develop a new product or service that
can establish a leadership position. One of the strengths of a new enterprise is
that the leadership of the venture plays a central role in all stages of the develop­
ment effort. Furthermore, the small firm could move quickly to gather the spe­
cialized capabilities necessary for product development [Burgelman, 2002].
In recent years, product complexity has dramatically increased. As products
acquire more functions, the difficulty of forecasting product requirements rises
exponentially. Furthermore, the rate of change in most markets is also increas­
ing, thereby reducing the effectiveness of traditional approaches to forecasting
future product requirements. As a result, entrepreneurs need to redefine the prob­
lem from one of improving forecasting to one of eliminating the need for accu­
rate long-term forecasts. Thus, many product designers try to keep the product
characteristics flexible as the development proceeds. A design and development
project can be said to be flexible to the extent that the cost of any change is low.
Project leaders can then make product design choices that allow the product to
accommodate changes in the team’s understanding of user needs [Thompke and
Reinertsen, 1998], For example, a designer might determine a base hardware
170 CHAPTER 8 Creativity and Product Development

platform and then make continual improvements to the product via software
updates.
Uncertainty is an inevitable aspect of all design and development projects, and
most entrepreneurs have difficulty controlling it. The challenge is to find the right
balance between planning and learning. Planning provides discipline, and learning
provides flexibility and adaptation. Openness to learning is necessary for most new
ventures that are finding their way into the market [DeMeyer et al., 2002],
Design of a product leads to the arrangement of concrete details that embod­
ies a new product idea or concept. A product’s visible design attributes, such as
color, shape, and texture, enable a firm to excite users and thus drive sales; they
also enable the firm to explain what a product does and how best to use it [Eisen­
man, 2013], More generally, the design process is the organization and manage­
ment of people, concepts, and information utilized in the development of the
form and function of a product.
The role of design is, in part, to mediate between the novel concept and es­
tablished institutional needs. For example, Thomas Edison designed and de­
scribed the electric light in terms of the established institutions and culture,
making this new innovation appear and function in a familiar way that fit the
existing infrastructure. As a result, he succeeded in developing an electric lighting
system that gained rapid acceptance as an alternative to the gas lamp [Hargadon
and Douglas, 2001]. As new products are designed, the challenge ultimately lies
in providing familiar cues that locate and describe new ideas without binding
users too closely to the old ways of doing things. Entrepreneurs must find the
balance between novelty and familiarity, between impact and acceptance
[Anthony et al., 2016].

I Tony Fadel] is a prototypical breakthrough thinker. While at Apple, he ,

i thought of the concept of a small portable digital music player, which later ,
became the iPod. He then went on to be a key player in the development of ■
the iPhone, which catapulted Apple to its current position as one of the
world’s highest valued firms. Tony looks at products and then re-envisions
how these products might be made easier to use or more accessible. Fadel! ;
followed up his work at Apple by creating the Nest Learning Thermostat.
The idea for a smart thermostat came to him while shopping for thermo­
stats for an energy-efficient home he was building. At the time, Fadell real- i
i ized that the state of at-home and office thermostats seemed to be caught in |
a time warp. These devices had few features and limited intelligence. With i
i this knowledge, he reimagined an easy-to-use thermostat that could be i
i controlled both manually and over the Internet. His invention is upending ।
i what had been a stagnant market for decades. Nest is now vying to replace i
i hundreds of millions of thermostats in homes and businesses, and its prod- !
uct line has expanded to include security cameras and smoke detectors. In i
2014, Google acquired Nest for $3.2 billion. ।
 8.2 Product Design and Development 171

Finalize design

FIGURE 8.3 Overall

development process.

Good, effective products or services are the outcome of a methodology based

on solid, proven design principles [Brown, 2008], Innovation is powered by a
thorough understanding of how people want products made, packaged, marketed,
sold, and supported. The overall development process is shown in Figure 8.3
[Thompke and Von Hippel, 2002]. This process includes design of the product
and its architecture, its physical design, and testing. The iPad and the Tesla Road­
ster sports car are examples of the outcome of a creative, artistic process of design.
Part of the user experience is the look and feel of a product. A good product is
attractive to look at and easy to use and understand. Furthermore, customers want
a product that does a few things really well. Fortunately, customers can participate
fruitfully in the product design process when the innovations are incremental
[Nambisan, 2002]. Good designers think about the qualities of a product as well
as its soft benefits such as warmth, status, and community.
172 CHAPTER 8 Creativity and Product Development

TABLE 8.5 Five practices of good product development.

■ Commitment of senior management to ■ Improvisation and iteration to develop a
the design process prototype
■ Clear and stable vision and goals for ■ Open sharing of information
the product
■ Collaboration of everyone on the team
Source: Lynn, Gary, and Richard Reilly. 2002. Blockbusters. New York: Harper Collins.

Design includes aesthetics as well as basic needs. A beautiful glass must be

functional as well as attractive. However, design also includes compromises and
limits. Even the Maglite flashlight, which is widely acknowledged for its good
design, is flawed by the spot in the middle of the light beam.
Successful product design and development requires commitment, vision,
improvisation, information exchange, and collaboration, as listed in Table 8.5
[Lynn and Reilly, 2002], These five practices may be easy to achieve in a startup
where collaboration is the order of the day. The product team, which may be all
of the employees of a startup, needs to clearly understand the vision for the prod­
uct and must work together effectively.
The product design process [step 2 in Figure 8.3] is shown in Figure 8.4. The
first step is to establish the goals and attributes of the product expressed as the re­
quired performance and robustness of the product (step A). When possible, the
potential customer should be included in the design process. The voice of the cus­
tomer can communicate the insights needed for the best products [Lojacono and
Zaccai, 2004], Potential customers can suggest ideas for new products and can be
involved throughout the product development process to provide continuous feed­
back [Ogawa and Piller, 2006]. Methods for capturing customers’ perspectives
include observation, interviews, and immersion (e.g., becoming the user).
In step B of Figure 8.4, the components and parameters available for adjust­
ment are identified, and specifications for the product are agreed upon. Specifi­
cations are the precise description of what the product has to do. In addition, the
set of physical and social constraints should be determined. Next, the product
configuration is established, and the components of the product are recorded.
Finally, the parameters of the product are optimized to achieve the best perfor­
mance and robustness at a reasonable cost [Ullman, 2003], A robust product is
one that is relatively insensitive to aging, deterioration, small variations in com­
ponents, and environmental conditions. For example, Wikipedia is constantly
subject to attempted degradation by hackers. Yet Wikipedia’s design enables it
to continually improve over time [Dixon, 2011],
Usability is a measure of the quality of a user’s experience when interacting
with a product. Usability is a combination of the five factors listed in Table 8.6.
Examples of a common product with poor usability are most DVR and DVD
players. New products should pass the five-minute test, which requires that the
product be simple enough to use after quickly reading the instructions and then
 8.2 Product Design and Development 173

From research and development—step 1

To prototype—step 3

FIGURE 8.4 Product design process (step 2 of Figure 8.3).

TABLE 8.6 Five factors of usability.

1. Ease of learning: How long does it take to learn the product’s operation?
2. Efficiency of use: Once experienced, how fast can the user complete the
necessary steps?
3. Memorability: Can the user remember how to use the product?
4. Error frequency and How often do users make errors, and how serious are
severity: these errors?
5. Satisfaction: Does the user like operating the product?
174 CHAPTER 8 Creativity and Product Development

trying it for a few minutes. Information technology products with excellent us­
ability are the iPhone, SnapChat, and Lyft.
Many system designs use a combination of modules within a specified archi­
tecture. A module is an independent, interchangeable unit that can be combined
with others to form a larger system. In modular designs, different components
share compatibility such that they can be mixed and matched to create an in­
teroperable system. For example, littleBits is a New York-based startup that
makes more than 60 miniature electronics modules such as fans, sensors, power
supplies, and WiFi interfaces. The modules are magnetized and can be snapped
together in different configurations to make products like remote controls, musi­
cal instruments, and smart-home devices. Changing one component does not
make the other components inoperable or less effective. Design methods using
independent modules make product design more predictable. Of course, the pre­
dictability inherent in modular design increases the chances that competitors can
develop similar products.
Realistically, most products consist of modules that possess some depen­
dency between them. For example, an automobile is a product that consists of
wheels, engine, body, and controls that are relatively interdependent. Products
made up of modules with intermediate levels of interdependence are harder for
competitors to duplicate and may also provide better performance than a design
based on purely independent modules [Fleming and Sorenson, 2001].
Designers strive to create new products differentiated enough to attract inter­
est but close enough to current products to be feasible to make a market. Many
new designs flow from changing the components, attributes, or integration
scheme to create a new product [Goldenberg et al., 2003]. The designer asks
what can be rearranged, removed, or replicated in new ways.
Over time, a dominant design in a product class wins the allegiance of the
marketplace. A dominant design is a single architecture that establishes domi­
nance in a product class. An example is the Microsoft Windows operating sys­
tem, used in the vast majority of personal computers. Eventually, a dominant
design becomes embedded in linkages to other systems. For example, the use of
Windows shapes hardware interfaces and the other software programs that com­
puters can run.
A product platform is a set of modules and interfaces that forms a com­
mon architecture from which a stream of derivative products can be effi­
ciently developed and produced. For example, Google’s Android and Apple’s
iPhone seek to be the leading platform for smartphone applications. Firms
target new platforms to meet the needs of a core group of customers but de­
sign them for ready modification into derivative products through the addi­
tion, substitution, or removal of features. Well-designed platforms also
provide a smooth migration path between generations so neither the customer
nor the distribution channel is disrupted. A good example of a platform is
Hewlett-Packard’s electronics and software used for its printers; although
Hewlett-Packard offers a wide range of printers, these products draw upon
relatively similar electronics and software.
 8.3 Product Prototypes 475

8.3 Product Prototypes

Whenever possible, new business ventures should create a prototype of their
product. A prototype is a rough model of a proposed product or service that
conveys the essential features but remains open to modification. Prototypes can
be pictures, sketches, mock-ups, or diagrams that can be collaboratively studied.
They also can be physical, digital, pictorial, or some combination of media.
Prototypes can be used to identify and test requirements for the product by
eliciting comments from designers, users, and others. New ventures can use pro­
totypes to redefine not only their product but also their business models and
strategies. For example, Twitter began as an internal messaging service for em­
ployees at the company where the company’s founders originally met. By learn­
ing how it was used in practice, they greatly improved the product before its
public release.

i Kevin Systrom and Michael Krieger did not have a photo-sharing platform i
I in mind when they set out to start a company. Their first product was i
i Burbn, an app that allowed users to broadcast their current locations, with !
I an option to attach a photo. The app did not get much traction, but the i
i founders noticed that the photo-posting feature was more popular than they i
i anticipated. This observation was the inspiration for Instagram, which was I
I sold to Facebook for $1 billion in 2012. i

In the creation of a movie or play, many innovators use sketches, story­

boards, and videos to describe the product. The designers of a movie or play
want to see how it works and engage in a collaborative redesign. The iterative
procedure for prototype development is shown in Figure 8.5. Multiple iterations
of the process are necessary to arrive at a satisfactory prototype.
New technologies such as computer simulations can make the creation of a
prototype fast and cheap. Rapid prototyping is the fast development of a useful
prototype that can be used for collaborative review and modification. An initial
prototype can be rough since it enables the team to view the product and improve
it. The ability to see and manipulate high-quality computer images helps create
innovative designs. For example, BMW uses computers to help engineers visual­
ize automobile design and the results of crash tests [Leonardi, 2012]. Maker
spaces or hackerspaces are community facilities that provide shared equipment
such as computers, 3D printers, and machine tools to enable members to develop
and share prototypes.
Product-development firm IDEO believes that prototypes should be “rough,
ready, right.” While working with Gyrus ENT to develop a better sinus-surgery
tool, IDEO employees demonstrated the value of having a prototype to show
customers. During one discussion, 10 surgeons struggled to explain the
176 CHAPTER 8 Creativity and Product Development

FIGURE 8.5 Prototype development process.

discomfort involved in using the existing tool. An IDEO manager picked up a

film canister, a white-board marker, and a clothespin and taped them together as
a prototype. The physical prototype helped to move the conversation along, al­
lowing the surgeons to hold and adjust it. The rough prototype was just that—
rough and unfinished—encouraging the surgeons to modify and tinker with it.
Creating a rough prototype allowed customers to engage in the development of
the product, and to enthusiastically adopt it in surgery. Eventually, IDEO and
Gyrus produced a tool that is used in over 300,000 procedures in the United
States every year.
Firms often use rapid prototyping to develop a minimum viable product
(MVP), which you may recall from Section 2.2 is a product having the minimal
feature set required to solve the problem or address the need and obtain customer
feedback. After developing an MVP, the next step is to develop what might be
 8.3 Product Prototypes 177

termed a minimum awesome product—one that becomes irresistible to custom­

ers because of its function, design, and social or emotional connection [Furr and
Dyer, 2014],
It is often best to carry multiple product concepts into the prototyping phase
and to select the best of those designs later in the process [Dahan and Srinivasan,
2000]. Keeping multiple product concept options open and freezing the concept
late in the development process affords the flexibility to respond to market and
technology shifts.
It is possible to create static and dynamic virtual prototypes that are dis­
played at a website for review and testing by suppliers, customers, and designers.
Virtual prototypes cost considerably less to build and test than their physical
counterparts, so design teams using Internet-based product research can afford to
explore a much larger number of concepts. Furthermore, Internet-based proto­
types can help to reduce the uncertainty in a new product introduction by allow­
ing more ideas to be tested in parallel. At the same time, however, designers
should recognize that certain aspects of products and services are more easily
tested virtually than others. For example, it is possible to test a wide range of
colors for a potential toothbrush virtually, but it is difficult to determine how it
feels in the user’s mouth.
For the innovator, a prototype is a mechanism for teaching the market about
the technology and for learning from the market how valuable that technology is
in that application arena. Uses for robots in situations too dangerous for people
have long been imagined. Many robotics companies tried and failed to create
robots that could successfully enter and explore disaster zones and other danger­
ous environments. For example, iRobot first demonstrated a prototype of the
Urbie robot in 1997. This was the first commercially available robot that was
able to climb stairs. This prototype showed the market that iRobot’s products had
overcome many of the fundamental limitations of other contemporary robots. By
2016, iRobot’s revenue was over $630 million, and its products were available
worldwide in over 55 major retail chains. Robots like the Urbie were used to
explore the rubble of the World Trade Center, and they have been used by the
military to explore situations that would be extremely dangerous for troops. Over
three million units of the Roomba, the consumer version of the Urbie, have been
sold. The Roomba uses similar technology to that of the Urbie to sweep and
vacuum floors.
Many firms have developed their products by entering potential markets
with early versions of the products, learning from the tests, and probing again.
These firms ran a series of market experiments, which introduced prototypes into
a variety of market segments. The initial product design was not the culmination
of the development process but rather the first step, and the first step in the de­
velopment process was in and of itself less important than the learning and the
subsequent, better-informed steps that followed. Software products lend them­
selves to rapid prototyping and early tests by using A/B testing methods with
potential customers.
178 CHAPTER 3 Creativity and Product Development

8.4 Scenarios
Any new enterprise can benefit from creating a set of scenarios to address com­
plex, uncertain challenges as it develops its strategy. A scenario is an imagined
sequence of possible events or outcomes, sometimes called a mental model. A
few realistic scenarios based on the industry context and a few associated possi­
ble sequences of events help an entrepreneur to plan for the future. Each scenario
tells a story of how the various elements might interact under a variety of as­
sumptions. It paints a vivid narrative of the future. The goal of scenario planning
is not to forecast what is going to happen but to encourage an openness of mind,
a flexibility of response, and a habit of questioning conventional wisdom.
Scenarios lead to learning in a two-step process: constructing a scenario and us­
ing the content of the scenario to learn [Fahey and Randall, 1998]. The key elements
of a scenario are shown in Figure 8.6. A scenario tries to answer key questions and is
based on a statement of the driving forces and the rationale for the story. For exam­
ple, entrepreneurs often weigh whether a new technology will be radical or nonlinear
and have a profound impact on the marketplace. A scenario can help define the im­
pact and time frame for a new technology. Creating four or five scenarios will help
portray the range of potential outcomes to core questions facing any organization.
An example of the outline of a scenario for the growth of electric auto sales
is shown in Figure 8.7. The structure of the story for electric vehicles can be used
to build several possible scenarios that can be used to learn about the opportuni­
ties in this market.

FIGURE 8.6 Elements of a scenario.

 8.4 Scenarios 179

FIGURE 8.7 Elements of scenarios for electric cars.

Entrepreneurs should ensure that the scenarios they craft are realistic and not
too optimistic. Otherwise, there is a danger that a scenario can become a mirage.
For example, by 2001, many futurists had created a scenario for the future of
telecommunications that was overblown and ill-timed. This rosy, nirvana-like
scenario missed the regulatory issues and the concept of excess capacity, leading
to overinvestment in the sector and a painful downturn [Malik, 2003],
To avoid this fate, entrepreneurs are well-served by crafting multiple sce­
narios that consider different situations. For example, in the scenario outlined
in Figure 8.7, they might consider situations in which vehicle manufacturing
capabilities scale slowly versus quickly, or in which the regulatory environment
is skeptical versus supportive.
180 CHAPTER 8 Creativity and Product Development

8.5 Spotlight on Teva Pharmaceuticals

Teva Pharmaceutical Industries is an international pharmaceutical company
founded in 1901 and headquartered in Israel, with facilities in Israel, North
America, Europe, and South America. Teva develops, manufactures, and mar­
kets generic and proprietary branded drugs, along with active pharmaceutical
ingredients. In 2015, Teva had a revenue of almost $20 billion.
Over the past 40 years, Teva has grown to become a global company through
acquisitions of emerging pharmaceutical firms. While Teva develops its own
drugs, it also actively monitors research success at other companies and makes
investments as it identifies promising products. Teva’s current offerings include
drugs for the treatment of multiple sclerosis and Parkinson’s disease. In 2016, Teva
acquired Actavis, a Dublin-based pharmaceutical company, for over $40 billion,
Teva promotes rapid prototyping through its sponsorship of hackathons, in
which engineers and developers of all sorts come together to try to design novel
solutions to big problems. By focusing on innovation and using scenarios that
provide insight into possible future directions, Teva has been able to survive and
adapt with time.

8.6 Summary
Creative thinking is a core competency of most new ventures. Entrepreneurs
should design their organizations and engage in practices to encourage creativ­
ity. Product design and development builds upon creativity, turning ideas, con­
cepts, and solutions into new products or services.
Prototypes are models of a product or service, and they can help a new ven­
ture learn the right form and function of a product by showing it to customers and
letting them observe it or try it. Furthermore, scenarios can be used to examine
possible future outcomes based on specific actions.

Principle 8
Knowledge acquired, shared, and used is a powerful tool for the entrepre­
neur to build a learning organization that can design innovative products
and grow effectively.

Video Resources
Visit http://techventures.stanford.edu to view experts discussing content from
this chapter.
Unlock Creativity with Motivation Tina Seelig Stanford
and Experimentation
Ideas Come from Everywhere Marissa Mayer Yahoo!
Product Development Process: David Kelley IDEO
Observation
 8.7 Exercises 181

8.7 Exercises
8.1 How might you influence innovation in a company using each of the six
parts of the Innovation Engine from Figure 8.2?
8.2 What role should the “end customer” have in the product design and
development process? Do customers always know what they want?
8.3 Capstone Turbine is a developer, assembler, and supplier of microtur­
bine technology. Its primary customers are in the on-site power produc­
tion and hybrid-electric car markets (www.capstoneturbine.com ). Using
the format of Figure 8.6, describe a scenario for the growth of Capstone
over the next five years.
8.4 The advantages of the Web as a distribution platform delivering services
and content are well known. Describe a few examples of its impact on
product prototyping and product design and development.
8.5 A number of software development methodologies exist to encourage
rapid design and implementation (e.g., agile software development,
extreme programming, etc.). Select two of these methodologies and
compare and contrast the specific product design and development
processes each is attempting to address and improve.
8.6 A Scientific American magazine article in November 2014 (https://
www.scientificamerican.com/article/pogue-5-most-embarrassing-soft-
ware-bugs-in-history/) featured some of the largest software failures
ever. Examine the list and select your favorite. Describe why failure
of knowledge management and the lack of behaving as a learning
organization led to this result.

VENTURE CHALLENGE
1. Examine your creative strengths and areas of improvement and share
them with your team.
2. Discuss the robustness and usability of your product.
3. Discuss your plans for developing a prototype of your product.