Anticipatory design science and entrepreneurial opportunity

Using design entrepreneurship, entrepreneurs listen to and empathize with customer pains and then generate solutions using the materials and resources at hand. [i]  This is what Buckminster Fuller , designer of the first geodetic sphere, called anticipatory design science, which aligns the human species with the design of our environment. Design entrepreneurship is the ultimate form of creative enterprise and is a noble calling for entrepreneurs, because it allows them to help satisfy needs and pains through new processes, products and services.

Humans use three methods to acquire knowledge to design our environment 

• Science uses experimentation to analyse the natural world.

• Humanities use metaphor and criticism to describe the human experience.

• Design uses pattern formation, synthesis and modelling to study the artificial world all around us. Design reduces pain. Design satisfies need. Design creates value.

What we call Design Entrepreneurship today dates back to the period of 'anticipatory design science' when design literature first impacted management theory. Only in the 1980s did designers and social scientists make the mutual mental leap to see that ‘designerly ways of knowing’ can solve wicked problems. Connecting management theory to entrepreneurship happened only twenty years ago, but now many have realized the power of this lean entrepreneurship methodology.

Designerly ways of knowing

We can approach design entrepreneurship through mindsets, human sense perception, addressable problems, and cognitive and reasoning perspectives, not to mention tools and practices. We call this ‘designerly ways of knowing’. The designerly approach means using enterprising and empathic mindsets. Powerful human perceptions and cognitive abilities affect how we use design and how we interact with end products.

The Designerly Way of Knowing uses hypothesis-driven entrepreneurship to test and validate assumptions concerning proposed solutions to wicked problems. ‘Design intelligence’ means using reasoning and intuition to frame and re-frame alternative solutions. Especially important is abductive reasoning, using the best information available (often making an educated guess) after observing phenomena for which there is no clear explanation; then testing your hunches until you have the likeliest possible explanation for the group of observations. Bringing it all together are divergent and convergent thinking, where you widen and then narrow your scope.

Opportunities begin as mysteries and finish as algorithms.

Let’s relate the story of the legendary Ray Kroc, who bought out the McDonald brothers’ drive-in in 1940s California, but kept the name. The mysterious question that entered Kroc’s mind back then was culinary, technological and social: 

‘What and how did the mass middle classes in the late fifties want to eat when they set out in their new Ford and Buick station wagons?’, he asked himself.

Entrepreneurial opportunities usually enter our minds as mysteries that are (at first) difficult or impossible to understand or explain. We call them puzzles; riddles; or secret, unsolved problems. For example, observing the traffic in Mexico City today, you might remark, ‘It’s a mystery to me how they ever get where they are going.’ But with the force of human intelligence, the newcomer in Mexico soon sorts out the mystery, which crumbles when he sees the logic system behind it.

Usually we begin with some rule of thumb that narrows the mystery down to a ‘thinkable’ size and guides us toward a solution as we explore the possibilities.

The enterprising mind puts the rule of thumb to work, thinks about the problem intensely, and then converts it and tests it using hypothesis-driven entrepreneurship. Only then, when it becomes a tested and validated hypothesis, and is validated, only then does it become an algorithm, or a ‘recipe for success’.  You can sell even business recipes such as franchises, or even whisper them into the ears of others (remember the older child who whispered the Lemonade Stand recipe into your ear!). 

In today-talk, we call a validated hypothesis a proven business model.  The business model is an explicit, step-by-step procedure for solving the problem, one that is simple enough that you can explain it to others. One way to show your Lean Business Model on one page is to use the Lean Business Model Canvas.

Ray Kroc’s hypotheses created McDonalds

Kroc just pared the mystery down. In the 1950’s post-war affluence and mobility, consumers, Kroc observed, for the first time wanted out-of-home eating experiences. So his first rule of thumb was quick service with limited menu options and accessibility by car, which narrowed the mystery down to a set of testable propositions. Using A/B testing, he tested and retested:

• Do they prefer charbroiled or pressure-cooked?

• Would a wider menu be attractive?

• Did they want spaghetti on the menu?

• Did they prefer drive-in or sit-down?

As his vision matured, Ray Kroc realized that McDonald’s was really in the Real Estate business [video]. From mystery to opportunity, from rule of thumb to recipe for success, Ray Kroc peeled away the layers and simplified the complexities down to a value proposition, which he tested time and time again with customers. Finally, he reached a model that he could repeat several times over, and even franchise.[ii]

What to do with your own mysteries?

Opportunity is born through intellectual force and through the creative act of an alert entrepreneur who converts the mystery into a recipe through experimentation and intuitive thinking.  It’s all about Alertness: This is lean entrepreneurship in action. Israel Kirzner’s theory of entrepreneurial alertness says that entrepreneurs have a special talent for seeing opportunities ‘out there’ waiting to be recognized. Where others see chaos and mystery, entrepreneurs see solutions and algorithms. The entrepreneur is an opportunity identifier who can spot unexploited market niches in advance of other people. Entrepreneurs use ideas, networks and relationships to identify future markets and technologies. They are opportunistic and move quickly to realize an opportunity before it is lost. They bring a new product or service onto the market when they think that there is an opportunity to redeploy the resources away from present, ‘sub-optimal’ configurations to more promising opportunities.[iii]

Entrepreneurs love to solve wicked problems

Entrepreneurs do not analyse ‘what is’ but rather ‘what is possible’, and this opens an opportunity for entrepreneurial discovery. With anticipatory design science, you can recognize what customers are willing to buy, the kinds of services and goods that technology and resources can produce, and untouched resources that can be assembled.[iv]

Another way of putting it is that entrepreneurs love to solve wicked problems. Climate change is a pressing and highly complex policy issue involving multiple causal factors and high levels of disagreement about the nature of the problem and the best way to tackle it. Obesity is a complex and serious health problem with multiple factors contributing to its rapid growth over recent decades. Poverty is a seemingly intractable issue. But it is clear that the motivation and behavior of individuals and communities lies at the heart of successful approaches.[v] Pick any of the United Nations' Sustainable Development Goals.

Updated from Asia-Pacific edition of Entrepreneurship Theory Process Practice (Melbourne: Cengage, 2019)

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[i] Much of my knowledge was inspired by Blank, S., Engel, J., & Hornthal, J. (2015). The lean launch pad educators teaching handbook (7th edn). Retrieved from https://venturewell.org/wp-content/uploads/Educators-Guide-Nov-2015-Final.pdf ; Blank, S. (2012). Developing a 21st century entrepreneurship curriculum. Retrieved from http://www.businessinsider.com/developing-a-21st-century-entrepreneurship-curriculum-2012-12 ; Blank, S. (2012, November 27). Open source entrepreneurship. Retrieved from https://steveblank.com/2012/11/27/open-source-entrepreneurship/ ; Blank, S. (2013). The lean launchpad educators course. Retrieved from https://www.forbes.com/sites/steveblank/2013/06/18/the-lean-launchpad-educators-course/#5e500a3b33c9 ; Blank, S., & Dorf, B. (2012). The startup owner’s manual: The step-by-step guide for building a great company. K&S Ranch. Retrieved from https://books.google.com/books/about/The_Startup_Owner_s_Manual.html?id=MT-TtgAACAAJ; Blank, S., Engel, J., & Hornthal, J. (2013). The lean launch pad educators teaching handbook. Washington, DC: NCIAA.; Blank, S. (2013). Why the lean start-up changes everything. Harvard Business Review, 91(5), 63–72. Retrieved from https://hbr.org/2013/05/why-the-lean-start-up-changes-everything; Owens, T., & Fernandez, O. (2014). The lean enterprise: How corporations can innovate like startups. John Wiley & Sons. Retrieved from http://bit.ly/2O1eq2D; VentureWell (2014, September 2). Lean LaunchPad®. Retrieved from https://venturewell.org/lean-launchpad/ .

[ii] Martin, R. L. (2009). The Design of Business: Why Design Thinking is the Next Competitive Advantage. Harvard Business Press. https://hbr.org/product/the-design-of-business-why-design-thinking-is-the-next-competitive-advantage/12176-HBK-ENG, Chapter 1.

[iii] Kirzner, I. M. (Ed.). (1973). Competition and entrepreneurship. University of Chicago Press; http://bit.ly/2Zvg5AV; Kirzner, I. M. (1980). Perception, Opportunity, and Profit: Studies in the Theory of Entrepreneurship (First Edition edition). Univ of Chicago Pr.; Kirzner, I. M. (1984). Incentives for Discovery. Economic Affairs, 4(2), 4; Kirzner, I. M. (Ed.). (1985). Discovery and the capitalist process. University of Chicago Press; Kirzner, I. M. (Ed.). (1989). Discovery, capitalism, and distributive justice. B. Blackwell; Kirzner, I. M. (1997). Entrepreneurial discovery and the competitive market process: An Austrian approach. Journal of Economic Literature, 35, 60–85. ssf. https://www.jstor.org/stable/2729693; Kirzner, I. M. (1999). Creativity and/or alertness: A reconsideration of the Schumpeterian entrepreneur. The Review of Austrian Economics, 11(1), 5–17. https://link.springer.com/article/10.1023%2FA%3A1007719905868?LI=true Kirzner, I. M. (2007). El Empresario. Revista de Economía y Derecho, 4(14), 113–137. Kirzner, I. M. (2009). The alert and creative entrepreneur: A clarification. Small Business Economics, 32(2), 145–152. https://link.springer.com/article/10.1007/s11187-008-9153-7 ; Kirzner, I. M., & Institute of Economic Affairs (Great Britain) (Eds.). (1997). How markets work disequilibrium, entrepreneurship and discovery. Institute of Economic Affairs; core-hf. https://iea.org.uk/publications/research/how-markets-work-disequilibrium-entrepreneurship-and-discovery ; Kirzner, I. M., Seldon, A., & Institute of Economic Affairs (Great Britain) (Eds.). (1980). The Prime mover of progress the entrepreneur in capitalism and socialism: Papers on “The rôle of the entrepreneur.” Institute of Economic Affairs. Transatlantic Arts, sole distributor for the U.S.A; The alert and creative entrepreneur: A clarification | SpringerLink. (n.d.). Retrieved January 26, 2020, from https://link.springer.com/article/10.1007/s11187-008-9153-7

[iv] Ardichvili, A., Cardozo, R., & Ray, S. (2003). A theory of entrepreneurial opportunity identification and development. Journal of Business Venturing, 18, 111.

[v] Australian Public Service Commission, & others. (2007). Tackling wicked problems: A public policy perspective. Retrieved from https://legacy.apsc.gov.au/tackling-wicked-problems-public-policy-perspective; Riedy, C. (2013, May 28). Climate change is a super wicked problem. Retrieved from https://medium.com/@chrisjriedy/climate-change-is-a-super-wicked-problem-b2e2b77d947d; see also Boik, J. (2017, February 20). Solving problems that matter could be the next big thing. Retrieved from https://medium.com/age-of-awareness/solving-problems-that-matter-could-be-the-next-big-thing-8a068dfa4ce2; Kolko, J. (n.d.). Wicked problems. Retrieved from https://www.wickedproblems.com/1_wicked_problems.php .