In this article we will talk about:
- The New World of Entrepreneurship
- The best of each methodology
- Step by step use of the PDCA cycle with other methods
- The tool we use
From Alexander Osterwalder 's famous Business Model Generation book (which talked a lot about design thinking, prototypes and business models), to the Eric Ries Lean Startup ("build - mensure - learn" model) to Steve Blank' s Customer Development, a series of methodologies focused on the world of entrepreneurship and startups have been created and applied in recent years.
These methodologies eventually emerged to meet a need for speed that some excellent methods of supporting business creation and improvement like the PDCA cycle, the GUT matrix, and the strategic planning results they were not getting it.
Now, imagine getting the best of both worlds by using new methods combined with consolidated methodologies in the management world to open new businesses. That's exactly what I'm going to talk about in today's article with a practical application of how to use the PDCA Cycle with some of these new proposals. Before getting into practical application, let's conceptually know the essence of each of these methods.
If we were to go into the details of each of these methods, I could write an article for each of them. So I'll show what I consider to be the essence of the main tools I like to use in conjunction with the PDCA cycle:
- Design Thinking - Very good for the planning stage of your new business. It allows for a greater understanding through a more complete process of ideation.
- Lean Startup - excellent for the agile creation part of prototypes. If you look at the main steps (build - measure - learn) you will notice a great similarity to the PDCA cycle itself.
- User Experience (UX) - involves understanding what the customer wants by the interaction of that person with your product, service, system, website, etc. Instead of using assumptions, one uses practical experience.
- Customer Development - has a lot of relation with the other methods and somehow uses part of them to arrive at a moment of discovery by experimentation and a way to find its client
It is obvious that these methodologies are much more than I wrote, but I wanted to show you just what I consider to be the essence of each one of them and how you can apply those knowledge in practice.
And now we'll see how to use it by following the PDCA cycle method together with other methodologies such as design thinking, user experience (UX) and agile methods. I'll use the case of a really cool business that was created in 2012, the Dollar Shave Club (if you want to have fun, click here and see one of the first advertisements created by them).
Step 1 - Planning (Plan) - red line
We already know the first stage of the PDCA. It is the so famous planning and within it you will have 4 essential steps for the future of your new business. Look:
- Step 1 - Identification of a problem (clear need): There is no right or wrong here, but a simple survey of what you think is a problem or need you want to solve. In the Dollar Shave Club case, the founders talked about the problems of having to shave frequently and headaches to always have good shavers.
- Step 2 - Search and observe (research / observe): With a well-defined problem, it's worth investigating and understanding what can be improved or what actually bothers him:
- Step 3 - Prioritize key items (prioritize / insights): Obviously in less summarized works you will find a number of items and it would not be very smart to focus at all. Therefore, select the most relevant ones. In our case:
- Need to buy frequently
- Need to move to buy
- Blades are blind
- Step 4 - Brainstorm ideas and hypotheses for solutions (brainstorm / hypothesis): This is the last step before we enter the next (execution) step. Here you can get all ideas of what is going to be done, which could be a brand new razor up to a signature of a razor blade delivery service (the chosen one).
Step 2 - Execution (Do) - red, blue and yellow lines
- 5 Step - Experiments: This is the moment when you put your hand in the dough. In the case of our PDCA Cycle Worksheet, you will list the ideas you had for each of the most important causes
One of the results of the implementation of these ideas was a site offering the signature product to analyze potential stakeholders:
- Step 6 - Product development (build it): Since the initial demand was great after the first tests (including attracting investors), the Dollar Shave Club did not even have to think about doing much more experimentation. In some businesses, when there is no good grip, it may be necessary to change direction (pivot) and try other raised ways and ideas.
- Step 7 - Explore opinions during development (explore): I consider this step one of the most important, since it is in it that you will talk to customers, understand the use of your product or service through an MVP (minimum viable product) or prototype. In addition, this step is essential for the next step, which is feedback.
Step 3 - Check - yellow line
- Step 8 - Receive feedback: If you have performed the 7 step effectively, you will receive lots of feedback and will understand where you missed and where you got it right. See in the fillout example of our PDCA cycle spreadsheet that both signature and acceptance have had excellent acceptance but that the option of having only one blade receive feedback from clients:
Step 4 - Action (Act) - yellow and red line
- Step 9 - think of new ideas: With the feedbacks, it's easy to review the process and understand what to do best. For the Dollar Shave Club one of the improvements was the offer of 3 different blades, one for each desire, from the cheapest and simple to the most complete.
This is the end of a complete and well done process. As you well know, in the PDCA cycle, processes are always reviewed and the wheel rotates again. Therefore, from the new ideas it is necessary to make new experiments.
- Step 10 - New Experiments: This is already the beginning of a new process and complete PDCA cycle. As you can see in the image, here you are already doing another turn. The only difference is that you are already more advanced in the process and development of your business as a whole.
To do all this example that we have shown here of the Dollar Shave Club I used the LUZ PDCA cycle sheet, a complete and practical tool to adopt in these cases: