Practical Case Studies – How Design Can Contribute to Startup Growth

Power of design to support achieving "Zero to One" in startups and new businesses. In the previous articles, we gave fundamental explanations of startups and design and discussed theories and thinking approaches obtained from our joint research.

In this article, we will look at a case of a startup in which we actually provided design support and will explain in detail how to put design into practice and what kind of effects and outcomes are expected from design. We want to share our know-how that should benefit all those involved in startups, including entrepreneurs, designers, and investors.

(Written by Yasuhide Yokoi, Final Aim)

> Previous Article: "Design Approach – Concepts, Thought Processes, and Four Quadrants"

What Kind of Design Can Accelerate a Startup?

Sony Design Consulting and Final Aim have come across various phases of many startups: from an early phase shortly after founding, a commercialization phase, and through to developing processes of products or services. In our joint research, we have picked up the major cases and reviewed them from both quantitative and qualitative perspectives of their outcomes and effects as well as their practical implementation. For those startups among them in which design was introduced smoothly, we have extracted their success factors, including their backgrounds and structures, and sorted out important points.

Including entrepreneurs themselves, a relationship of a startup with design at the early stage begins with an appointment of an outsourced designer in many cases. From this viewpoint, we will cover in this article the practical know-how and essence that can be shared between all those involved, including designers collaborating with startups and investors responsible for general management and finance.

Case Study: Design Introduction in TIER IV, Inc.

Let us now introduce a case of TIER IV, Inc.

TIER IV is a global startup of approximately 200 employees with headquarters in Nagoya City, Aichi Prefecture, and offices in Tokyo and Silicon Valley (according to Presidents Dictionary, July 2022). The company develops an operating system "Autoware," which is open-source software for automated driving and self-driving mobilities. The company was the first in Japan to perform a demonstration experiment of a remote-controlled automated driving system on a public road in December 2017, which successfully achieved Level 4 of fully automated driving, where the system performs all the driving tasks under specific conditions.
Since its founding in December 2015, the company has had steady fundraising rounds through capital increases through third-party allocation. Its valuation has reached more than 88.3 billion yen in just seven years (according to "STARTUP DB," October 2022). In July 2022, the company raised 12.1 billion yen in Series B financing from equity investors, including Sompo Holdings, Inc., Yamaha Motor Co., Ltd, and Bridgestone Corporation, and the fund has been raised since its founding has amounted to 29.6 billion yen.

Yasuhide Yokoi, the Chief Design Officer of Final Aim, has offered design support to TIER IV from its early founding stage, coordinating closely with Shinpei Kato, the founder and CTO of the company and an associate professor at the University of Tokyo. We have developed and launched a number of original designs for mobility systems, such as a self-driving taxi and an automated micro-mobility system for logistics, successfully contributing to the realization of TIER IV's visions and social implementation and the rapid growth of the company's valuation.

"Milee" - Designing Icon of "Autonomous Vehicles" and The Corporate Identity

The first case of our design collaboration was the design of an autonomous mobility, "Milee," that TEIR IV was developing at the time. Milee is a vehicle targeted at taxi or cab services for transporting passengers. The body of Milee is based on an electric golf cart. It is provided with a 3D laser scanner (LiDAR) and a camera as an image sensor so that recognition, judgment, and operation are all automated by the software mentioned above - "Autoware" - for full-autonomous driving.

TIER IV's self-driving mobility "Milee"

Our first contact with TIER IV was in 2016, when autonomous driving technology was an exciting trend as an advancing field within the industry, with the U.S. in the lead. However, technical information about the technology, let alone its products and services, were rarely mentioned in general news, and its social recognition was still very low.
The software that TIER IV was developing at the time was still in the process of development, and, as a startup company, the big fundraising was yet to come, and their name was known only to a limited number of people.

The first proposal we had from the company was very specific: "to develop a vehicle to test the software." While taking in such inputs, we also exchanged in-depth dialogues with Mr. Kato about the company's latest milestones as well as mid-term and long-term visions, including his visions and ambitions as an entrepreneur, his mission and reasons for founding the company, a kind of business form he aims for, and finance strategies.

At this stage, although we needed to mind about time and deadline, we tried not to rush into designing for the vehicle development. We first started with the discussion from point zero to gradually withdraw "How it should be = Vision." We then set a goal for the first design project to create an icon as a crystallization of the Vision, elevating its perspective and viewpoint.

Organic processes using both linguistic/nonlinguistic approaches toward the crystallization of design concepts

After resetting the goal, we then had discussions with Mr. Kato. We ventured to set a straightforward agenda, "What is TIER IV?" and proceeded with organic processes using both linguistic/nonlinguistic approaches, including keyword extraction using various expressions such as onomatopoeia and mimetic words, visual collage, three-dimensional molding from sketches to 3D modeling, market research of competitive designs, and even delving into the history of transport and vehicles.

The followings are the design concepts that were crystallized up to that point.

  • The field of self-driving vehicles is at dawn (at that time), and there is no specific general recognition or market formation model. We need to create our own "design solution." No unique outcome will be brought about if we just consider "how it should be" from the existing "automobiles."
  • In addition to establishing an identity for TIER IV, this project is about creating an "icon" of a self-driving car. We should work on this project with such enthusiasm that other startups will follow TIER IV's vehicle as a model.
  • The self-driving car developed by TIER IV is an "autonomous mobility" rather than an automatically driven car. We shall work on its design as if we are creating a creature, which will be an icon that is widely accepted by everyone in society, regardless of age or gender.
  • Imagine a small child encountering an autonomously moving Milee in the town. We should work on the car's design so that the child can go home and tell the parents the story and experience of the first encounter with a self-driving vehicle just by drawing a simple sketch.

As we performed such design iteration (cyclic design development process of planning, prototyping, testing, and refining repeated in a short span) from the concept stage, we tried to design a mobility form integrating every perspective required at the time. This iteration eventually accumulated to bear fruit as Milee.

Such design work has contributed greatly to increased publicity through media exposure after the presentation of Milee, not to mention the business development and finance of the company. This subsequently led to the demonstration experiments held all over Japan, where Milee is used as a test vehicle for the company's software, Autoware. Milee is a successful case example, becoming an icon representing TIER IV and establishing the company's identity.

We have established an icon that is widely accepted by everyone in society, regardless of age or gender
While showing no technical complexities but rather emphasizing affinities, the interior is designed so that the user can still experience in an instant the "Level 4" fully automated driving
The key visual also appears in the UI design of the ride-hailing app

Role of Design in Scalable Growth

The above-mentioned operating system Autoware for autonomous driving vehicles, is open-source software with excellent versatility and expansibility and can be introduced not only to automated driving vehicles but also to systems in various fields. TIER IV has envisioned the vast development of enterprise based on its technical potential since the early stage. Still, our design support has also contributed to realizing the company's scalable vision, enterprise, and valuation.
One example is "Logiee," - an automated driving mobility system for short-distance distribution presented as our second design collaboration project following Milee.

"Logiee" - automated driving mobility system for short-distance distribution

The requirement at the first stage of the project was to set a simple goal - "to make progress on design and development of a new vehicle targeting the distribution industry."
In this first stage, we found out that there were so many various types of "distribution" depending on places where the vehicle is used - company offices, warehouses, airports, commercial facilities, housing complex, and last mile (the final section or point of goods delivered to each customer). Even if the software can flexibly cope with such various cases, social implementation is impossible without hardware that can adopt the software.
Then, what kind of hardware should we design? It might seem appropriate to individually design hardware to meet the above various types of needs. However, from the viewpoint of startup management, this approach does not fit the perspective of scalability in improving business growth and company valuation.

Based on this hypothesis, we closely exchanged ideas back and forth with Mr. Kato, which bore fruit in the design of Logiee. The main feature of Logiee is that, while succeeding the identity established by Milee, its body is divided into a base part and an upper part that can be customized in various ways. Also, when setting goals for the project, we assumed that we would design and develop its variations, asking ourselves, "what kind of customization is possible" and endeavored actually to accomplish this mission.

The body is divided into a base part and an upper part that can be customized in various ways

Similarly to Milee, Logiee also attracted attention from media and clients at exhibitions right after its presentation and was used as the test vehicle for the software. Moreover, we have achieved many business partnerships where Logiee is used for transportation within large enterprise premises, as a movable cart inside a major domestic supermarket, or as a test vehicle in demonstration experiments for last-mile delivery services cooperating with restaurants and local entities.
We have also contributed through our design perspectives to the company's major fundraising after the presentation of Logiee and thus to the startup's scalable growth, as in the case of Milee.

Support with Design from Business Planning to Social Implementation

Following Milee and Logiee, let us introduce a case of designing an "AI Pilot," where we contributed with more versatility and expandability in business and social implementation aspects.
AI Pilot is a low-speed automated driving car system for short-distance transportation within a commercial facility or in a suburb or logistics within a factory or a warehouse. AI Pilot can be mass-produced and is an integrated system including various types of hardware and software, such as sensors necessary for automated driving (LiDAR, cameras, IMU (inertial measurement unit), GPS, etc.), and a computer device. A housing in which all the sensors, such as calibrated LiDAR and cameras, are attached to a roof of an existing car to be connected to the computer device in which Autoware is installed so that anyone can instantly build a self-driving car.

Turn a conventional car into a self-driving vehicle by simply mounting AI Pilot on top and connecting it to the vehicle interface

Also, in this development of the AI Pilot, the designer closely cooperated with the developing sites and comprehensively supported the design, planning, and production process.

In the early stage, we planned and realized a design focusing on technical verifications without considering the conditions required for mass production or sales marketing. To be more specific, we initially did not design the final product but intended to provide a single prototype at the early stage. As we proceeded, we updated the design using only conventional materials, such as square pipes and sheet metals, to a version using industrial 3D printers.
Throughout such processes, we had agile tests on every requirement - technical structures of the software and hardware, and product quality such as easy attachment or esthetics of the appearance, trying to eliminate risks that may arise after mass production or presentation of the product. After completing the final version, we finally started selling the product.

As a result, our design met with a favorable wide-ranged reception from users and sales partners. The product has been developed every year, and in 2021, AI Pilot was chosen to be used for "Demonstration experiments of automated driving mobility services utilizing the 5th generation mobile communication system 5G", which was a public offering of Tokyo City, and many of AI Pilot have been already implemented in the society since then.

AI Pilot was introduced in the demonstration experiment for automated driving mobility service in the Nishi Shinjuku area

What are the Success Factors of Design Collaboration?

We have looked at the cases of TIER IV where design and designers contributed to the scalable growth of the company's vision/enterprise/company evaluation from its founding stage up to its advanced business and social implementation stage. However, we do not think such an outcome was brought only by the collaboration between the designers and the startup. We reflected upon many of our works bearing that issue in our mind, and we discovered some elements that are critically essential for a successful collaboration.

Designers should understand management, and entrepreneurs should understand design with great clarity and accuracy.

Designers tend to take approaches that emphasize self-expression. As a result, in some cases, primary goals in management, including realization in production and selling, profitability in sales and cost, and legal matters based on intellectual property rights, may be neglected.
To avoid such situations, designers must acquire management basics and stand close to entrepreneurs and startups. The final impact will greatly change if the designer can think that designing includes not only the work of designing the product but also the work of solving management issues.
On the other hand, the entrepreneur of the startup must also ask oneself severely, "Why do we need design?" and "What do we want to achieve?" and frankly pose the same questions to the designers so as to understand each other deeply.
For example, it would be better if the designer and the entrepreneur had close briefings from an early stage of the collaboration to improve the accuracy of the content. Discussion points may include basic management strategies, such as the company's strong and weak points; goal numbers related to finance, such as sales and valuation; technical features and a development road map; sales planning, such as sales activities and marketing, and problems involving design into management strategy.
We can definitely say that no good design can be created from collaboration when there is no relationship between the designer and the entrepreneur in which they can deepen their thoughts and understand each other on the above primary and essential discussion points.

Direct and agile cooperation structure between designers and entrepreneurs.

It is essential to establish a system where the designer and the entrepreneur, as the top management, can collaborate consistently from planning, and making decisions, through to final implementation. This has been true for all our successful projects where we had the very same system, including the collaboration with TIER IV, in which speed and rapid growth were the major premises.
This will naturally require a wide knowledge of every step of processes, from management to development. A system in which not only the entrepreneurs but also the designers, whether employed or outsourced, can quickly catch up with the situations or the problems is desirable. That is why we need the ability to practice "Concepts and Thought Processes," as discussed in the previous chapter. "Development is slow," "Product or services does not sell," or "Fundraising goes wrong" - these tough and urgent situations may happen to a startup every day. This is why it is an essential success factor to build a system where the designer and the entrepreneur can work together to make a speedy breakthrough.

Introducing design through long-term and investing approach.

Though overlapping the above factors, the design collaboration should start from the earliest stage possible. The designer and the entrepreneur must be aware that their relationship does not end at the design stage. Still, they are both responsible until they achieve the final implementation and reach the goals. This applies not only to the individual design of products or services but also to the company itself. The same important responsibilities apply to stages of the company from founding to exit.
For this reason, a startup aiming for a "home run" in a long-term perspective must have a higher ideological viewpoint. However, in reality, design is often taken as a short-term "skyrocket." Even so, since it is a startup, we believe that the key to success depends on whether or not the startup can maintain the investing approaches to design and the design application system to keep the efforts of introducing design through accumulating policy settings and daily actions toward design.

Relationship between Designer and Entrepreneur, and Elevate Each Other

In this chapter, based on the example cases of collaboration with TIER IV - a major startup company in the field of automated driving, we tried to explain as practically as possible what kind of collaboration should be carried out between a designer and an entrepreneur, and what effects and outcome are to be expected from such a collaboration. Although there are more detailed small points, the above-summarized success factors are important. If we are to put this essence into one phrase, it should be "Introduce design and collaborate with designers as an investment."
Design may be considered costly in some cases. Nevertheless, we hope for entrepreneurs to perceive design positively and for designers to take approaches to understand management viewpoints and investment thoughts to build a relationship in which they can cultivate themselves.

Written by Yasuhide Yokoi, Final Aim
February 8th, 2023

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