What is Design Thinking and Why Is It So Popular?

What is Design Thinking and Why Is It So Popular?

Design thinking has gained popularity as an iterative process that seeks to understand users, challenge assumptions, redefine problems, and create innovative solutions through prototyping and testing. It is a way of thinking that helps us observe and develop empathy with our target users. By going through the five phases of design thinking - Empathize, Define, Ideate, Prototype, and Test - designers can identify alternative strategies and solutions that may not be immediately apparent.

One key aspect of design thinking is the ability to avoid being captured by easy solutions. Designers treat the initial problem as a suggestion rather than a final statement, and they think broadly about the underlying issues that may be causing the problem. They use techniques like the "Five Whys" to get to the root causes. Instead of jumping immediately to a solution, designers take the time to determine the fundamental issue that needs to be addressed.

Design thinking also involves integrating what is desirable from a human point of view with what is technologically feasible and economically viable. This combination allows designers to create products that meet user needs and are commercially successful. In essence, design thinking provides a third way of looking at problems, challenging our assumptions and everyday knowledge.

Diligence at Social Capital Part 1: Accounting for User Growth

When it comes to assessing user growth, it's important to consider both the number of registered users and their level of activity. A user who has registered but is not active in your product may not be getting much value and may not be a good indication of product-market fit. To account for this, it's helpful to calculate the Monthly Active Users (MAU) growth using the formula: MAU(t) - MAU(t - 1 month) = new(t) + resurrected(t) - churned(t).

By looking at MAU growth in this manner, we can gain a better understanding of the true user engagement and product-market fit. Additionally, the quick ratio, which is calculated as (new + resurrected)/churned, gives us insights into the quality of user growth. A quick ratio greater than 1 indicates positive growth, with the ideal range for a consumer company being 1.5-2.0. This means that for every 3 customers gained, only 1.5-2 customers are lost.

It's worth noting that this approach can be applied not only to monthly active users but also to weekly active users. If a product is highly sticky and retains users at a high level on a monthly basis, it may be beneficial to explore generating the next level of engagement at a weekly level. This allows for deeper user engagement and can further enhance product-market fit.