LECTURE NOTES
Design Thinking
Unit-5
Mr. V S R K RAJU DANDU
Assistant Professor
Department of Computer Science and Engineering,
SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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OBJECTIVES
The Objectives of this lecture are:
• Understand how design thinking applies to business strategy and innovation
• Identify major business challenges and how DT can address them
• Learn how startups use DT for rapid experimentation
• Explore prototyping, business models, and product marketing
• Prepare students for startup planning, reliability, and maintenance of products
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Design Thinking Applied in Business & Strategic Innovation
What It Means:
Design Thinking (DT) is not just for product design. It’s a strategic tool for solving
business problems, unlocking innovation, and creating market differentiation.
Key Areas of Application:
• Redesigning customer experiences
• Creating new business models
• Innovating internal processes (HR, sales, logistics)
• Building a culture of innovation
Real-World Example:
IBM applied design thinking to software product development, which led to:
• Faster project delivery by 75%
• Over 300% ROI on design-led projects
• Better alignment between tech teams and user expectations
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Design Thinking Principles That Redefine Business
Principle Business Impact
Empathy Understand customer needs → creates meaningful products
Define Focus on the right problem to solve → avoids waste
Ideate Breaks mental blocks → encourages creativity
Prototype Low-risk experimentation → test before investment
Test Real-world validation → improves product-market fit
Collaboration Cross-functional thinking → holistic innovation
Iteration Encourages fast feedback → agile and flexible response to change
Real-Life Case:
Airbnb:
• Applied empathy by interviewing hosts & guests
• Found major trust issues in platform usage
• Redesigned the review system and added professional photography
• Result: Exponential growth and user trust
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Business Challenges Solved by Design Thinking
Business
How DT Helps Example
Challenge
New product lines and customer Netflix introduced kids' content
Growth stagnation
segments through empathy based on usage data + interviews
Samsung used DT to redesign
Prototyping and testing multiple
Predictability smartphone UI based on predicted
outcomes before execution
behavior
Spotify continuously adapts
Rapid market Quick iteration and feedback
playlists based on listener mood and
changes from users
trends
Maintaining Real-time feedback to remain YouTube Shorts developed to retain
relevance aligned with user needs Gen Z audience
Extreme Focus on differentiated Tesla's UX-focused EVs stand out
competition experiences over features from traditional car makers
Coca-Cola’s “Share a Coke” name
Injecting personalization and
Standardization campaign humanized a standard
emotion into "dry" services
product
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Design Thinking to Meet Corporate Needs
Corporate Integration of DT:
• Sales: Redesigning the sales funnel through user journey mapping
• HR: Onboarding experience redesign (IBM, Cisco)
• Customer Service: Using empathy to redesign support systems
Case Study:
PepsiCo’s Chief Design Officer, Mauro Porcini, redesigned the vending machine
experience to make it more interactive and appealing. Result: Higher engagement,
branding value, and sales.
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Design Thinking for Startups
Why DT is a Game-Changer for Startups:
• Helps validate real problems, not just assumptions
• Allows quick failure at low cost
• Aligns teams around a clear value proposition
• Leads to better investor pitches and product-market fit
Example:
Dropbox:
• Did not build the product first
• Created a video prototype
• Used feedback to validate demand before development
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Defining and Testing Business Models and Business Cases
Business Model Canvas Components:
• Customer Segments
• Value Proposition
• Channels
• Customer Relationships
• Revenue Streams
• Key Activities
• Key Resources
• Key Partners
• Cost Structure
Steps:
1. Create assumptions
2. Design a canvas
3. Build an MVP
4. Test each assumption
Example:
Zappos: Didn't own inventory at first
• Posted photos of shoes online, bought them from stores only after getting an order
→ validated business model cheaply
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Developing and Testing Prototypes
Purpose:
• Save money
• Get early feedback
• Catch usability issues
• Involve users in the product journey
Types of Prototypes:
• Paper sketches (used by Google)
• Digital wireframes (Figma, Adobe XD)
• 3D printed models (hardware products)
• Beta software builds (Tesla updates)
Real-World Example:
Tesla:
• Rolls out software to selected users (beta) before final updates
• Monitors driving data to improve autopilot features
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Product Marketing, Maintenance, Reliability & Startup Planning
Product Marketing:
• Positioning your product in the minds of customers
• Tools: AIDA Model (Attention, Interest, Desire, Action), Social Media Marketing,
Testimonials
Maintenance:
• Technical updates
• Customer support system
• Documentation & user education
Reliability:
• Product should consistently work as expected
• Testing under different conditions (load, weather, user profiles)
Startup Planning:
1. Identify Problem
2. Empathize with Target Users
3. Design MVP
4. Create a Business Model
5. Pitch to Investors
6. Launch and Scale
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Activities for Design Thinking + Business Innovation
Each activity focuses on specific learning objectives like empathy, prototyping, strategic
thinking, business model testing, marketing, and product planning.
1. 3-Minute Product Pitch
Objective: Practice concise business storytelling.
Instructions:
• Students must explain their product idea using the format:
➤ Problem → Solution → Why it works → How it helps customers
Deliverables:
• 1 slide with product sketch or photo
• 1-minute problem & user intro
• 1-minute solution & benefits
• 1-minute on how they plan to launch
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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2. Empathy Map + Persona Creation
Objective: Understand customer behavior and emotions.
Instructions:
• Choose a target customer (e.g., college student, single parent, working professional)
• Create a Persona Card (name, background, goals, frustrations)
• Fill in an Empathy Map:
o What do they Think and Feel?
o What do they Hear?
o What do they See?
o What do they Say and Do?
Deliverables:
• Persona profile
• Empathy map poster or slide
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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3. Customer Journey Mapping
Objective: Visualize how customers interact with your product or service.
Instructions:
• Define 5–7 stages of the customer journey (e.g., Awareness → Research →
Purchase → Use → Support)
• Map customer emotions, pain points, and goals at each stage
Deliverables:
• Journey map with visuals, emoji icons, and narrative
• Identify one major pain point and suggest an innovation
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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4. Problem Reframing Sprint
Objective: Learn to redefine vague problems into real business challenges.
Instructions:
• Give students a broad problem (e.g., “Traffic jams in cities”)
• Ask them to reframe it into 3 different How Might We...? questions
o E.g., "How might we reduce idle time during traffic?"
o "How might we encourage ride-sharing?"
Deliverables:
• A slide or chart showing original problem + 3 reframed versions
• Discuss in teams: Which problem statement is most useful for innovation?
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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5. Business Model Canvas Activity
Objective: Define the startup’s core business engine.
Instructions:
• Provide a blank Business Model Canvas
• Ask students to fill in:
o Customer segments
o Value proposition
o Key partners, revenue streams, etc.
Deliverables:
• One completed canvas per team
• Quick 2-minute walkthrough of each section
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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6. Low-Fidelity Prototyping (Paper / Digital)
Objective: Build a tangible version of the idea without coding or expensive tools.
Instructions:
• Use paper, cardboard, or online tools (Figma, Canva, Balsamiq)
• Create UI sketches, service maps, or physical product mock-ups
Deliverables:
• Display of their prototype
• Peer review: What works? What’s missing?
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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7. Market Research Interview Roleplay
Objective: Practice real-life empathy and feedback collection.
Instructions:
• Students pair up; one plays the “customer,” the other the “entrepreneur”
• Ask questions like:
o “What is your biggest pain point in ___?”
o “How do you solve that now?”
• Rotate partners for different insights
Deliverables:
• Summary of 3 key customer insights
• Reflect on how they might change their solution based on interviews
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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8. Startup Marketing Plan
Objective: Design a launch strategy for a product.
Instructions:
• Choose marketing channels (Instagram, Google Ads, Events, Referrals)
• Define their audience and create a short marketing message
• Sketch a basic ad/poster/flyer
Deliverables:
• 1-page marketing plan
• Sample social media post or tagline
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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9. Reliability and Maintenance Plan
Objective: Plan for long-term success and product stability.
Instructions:
• Ask teams to identify:
o How often does the product need updates?
o What could go wrong?
o How will customers report issues?
o How will they solve those issues quickly?
Deliverables:
• Risk mitigation table
• Maintenance checklist or schedule
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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10. Innovation Reverse-Engineering
Objective: Learn from successful startups.
Instructions:
• Pick a successful product (e.g., Swiggy, Paytm, Tesla)
• Identify how they used design thinking principles:
o What problem did they solve?
o What prototypes did they likely test?
o What made them scale fast?
Deliverables:
• Short 5-minute team presentation or infographic
• Link back to DT stages (Empathize, Define, Ideate, etc.)
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Bonus Group Activity (Class-Level)
Startup Expo Day
• Students set up small booths or posters
• Pitch their idea + prototype to visitors or peers
• Simulate investor Q&A
Judging Criteria:
• Innovation
• Feasibility
• Business model
• Design thinking application
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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2 MARKS QUESTIONS
1. Define Design Thinking. (K2)
Design Thinking is a human-centered, iterative problem-solving approach
focused on understanding user needs, redefining problems, and creating
innovative solutions through prototyping and testing.
2. List any four business challenges that Design Thinking can solve. (K2)
Growth, Predictability, Maintaining Relevance, Extreme Competition
3. What is a Business Model Canvas? (K2)
A Business Model Canvas is a visual tool used to describe, design, and analyze
business models through key components like customer segments, value
propositions, revenue streams, etc.
4. Give two benefits of using prototyping in startups. (K3)
Helps test ideas quickly at low cost, and reduces risks by gathering early user
feedback.
5. What is empathy in Design Thinking? (K2)
Empathy is the process of deeply understanding the feelings, thoughts, and
experiences of users to design meaningful solutions.
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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6. Name any two principles of Design Thinking. (K2)
Empathy and Iteration
7. Define a Persona in Design Thinking tools. (K2)
A persona is a fictional character created to represent different user types
who might use a product in a similar way.
8. What is a prototype? (K2)
A prototype is an early, simplified model of a product used to test ideas and
gather user feedback.
9. State one example where Design Thinking was used in a startup. (K3)
Dropbox used a demo video to validate its idea before building the actual
product.
10. Mention one use of journey mapping in business design. (K3)
It helps identify user pain points across different touchpoints to improve
service or product design.
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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10 MARKS QUESTIONS
Q1. Explain the application of Design Thinking in business with a real-time
example.(K3)
Introduction:
Design Thinking is a problem-solving methodology that helps businesses design innovative
solutions by focusing on customer needs and experiences. It promotes empathy,
creativity, and iteration—enabling businesses to solve complex challenges.
Application in Business:
1. Understanding User Needs
o Companies apply design thinking to understand customer pain points through
empathy and interviews.
o Example: FinTech startups interview users to find challenges in using
traditional banking.
2. Iterative Innovation
o Businesses build small prototypes (MVPs) and improve based on feedback.
o This reduces risk and investment before product launch.
3. Cross-functional Teams
o Design Thinking promotes collaboration between designers, engineers,
marketers, and customers to generate holistic solutions.
Real-time Example: Airbnb
• Problem Faced: Low user trust in listings and hosts.
• Empathy Phase: Found that users didn’t trust poorly photographed apartments.
• Define: Lack of trust due to amateur photos and inconsistent descriptions.
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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• Ideate: Hire professional photographers and standardize listings.
• Prototype: Applied the idea in New York first.
• Test: Bookings shot up. Applied this globally.
Results:
• 2X increase in bookings
• Boosted user trust and brand credibility
• Airbnb’s valuation grew exponentially
Conclusion:
Design Thinking transforms businesses by creating user-centric, innovative, and feasible
solutions. It allows companies like Airbnb to deeply understand customer needs and adapt
faster than traditional methods.
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Q2. What are the major business challenges addressed by Design Thinking? Explain
with examples. (K4)
Introduction: Businesses today face constant challenges such as maintaining relevance,
extreme competition, and unpredictable markets. Design Thinking helps companies tackle
these issues innovatively.
Key Challenges Solved by Design Thinking:
1. Growth & Innovation Stagnation
o Example: Lego was losing relevance. Used Design Thinking to reintroduce play
kits based on user feedback—sales soared again.
2. Unpredictability in Markets
o DT allows rapid prototyping and iteration.
o Example: Startups in the food delivery sector use customer insights to adapt
menus and delivery models.
3. Maintaining Relevance
o Example: PepsiCo launched healthier products based on user demand for
better wellness. Design Thinking helped test product concepts before launch.
4. Extreme Competition
o DT helps in differentiating products.
o Example: Apple’s focus on user experience through empathy and aesthetics
made it a market leader.
5. Standardization vs. Customization
o DT helps businesses personalize experiences.
o Example: Nike’s custom shoes via online configurators improve user
satisfaction.
Conclusion:
Design Thinking isn’t just about creativity—it’s a strategic tool to address the toughest
business challenges by focusing on user-centric innovation.
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Q3. Discuss how Design Thinking helps define and test business models and business
cases. (K4)
Introduction:
Before investing heavily in any business model, companies need to validate whether the
idea will work in the real world. Design Thinking offers structured tools to define,
prototype, and test business models.
Defining Business Models Using Design Thinking:
• Use the Business Model Canvas: Define segments like:
o Customer Segments
o Value Proposition
o Revenue Streams
o Cost Structure
o Key Resources and Channels
• Conduct customer interviews to test assumptions.
• Reframe ideas based on empathy and research.
Testing Business Models:
• Build low-cost MVPs to validate user demand.
• Use feedback loops to iterate on pricing, distribution, and value delivery.
Real-time Example: Zappos
• Founder tested the idea by taking photos of shoes from stores, listing them online.
• When orders came, he purchased the shoes and shipped them manually.
• Validated the demand for online shoe buying—before building the actual supply
chain.
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Business Case Testing:
• Business cases include ROI, costs, timelines, and risks.
• Prototypes help measure actual user reactions vs. predicted behavior.
• DT reduces the gap between theory and market reality.
Conclusion:
Design Thinking enables startups and corporates to define strong, user-backed business
models and test them with real users, minimizing the risk of failure.
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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Q4. Explain the role of prototyping and testing in Design Thinking with reference to
product innovation. (K3)
Introduction:
Prototyping and testing are core components of Design Thinking. They allow businesses to
turn ideas into tangible forms and gather feedback before full-scale development.
Prototyping in Product Innovation:
1. What is Prototyping?
o Creating a simplified version of a product to test its functionality or
appearance.
o Can be paper-based, digital, or physical.
2. Why Prototype?
o Saves time and money
o Gets early customer insights
o Encourages creative exploration
Testing in Design Thinking:
• Tests are conducted with real users.
• Focus on user behavior, not just opinions.
• Helps identify flaws, usability issues, or unmet needs.
Real Example: Tesla
• Autopilot Feature:
o Built beta versions and released them to select customers.
o Collected real-time feedback and crash data.
o Updated software frequently based on test results.
Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
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• Result: Improved safety, features, and customer satisfaction
Conclusion:
Prototyping and testing are essential for reducing risk and creating user-validated
products. Tesla’s innovation strategy is a real-world proof of how continuous testing leads
to high-quality innovation.
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Department of Artificial Intelligence and Machine Learning, SRKR Engineering College, Bhimavaram, Andhra Pradesh - 534202
