Why you should design think your next business model innovation
In what can only be described as a harsh and competitive business environment, applying a design thinking approach to create a sustainable business model is essential to discovering, developing and executing a company’s next innovation venture. Allow me to demonstrate the concept below.
“Design thinking is a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.” Tim Brown, CEO of IDEO.
Embracing a designer’s mindset while tackling a new business idea, allows you the opportunity to consider a more holistic view of your innovation journey without undermining the details of how you are going to execute it. It is sort of an actionable conversation with your business idea that evolves from ideating with your colleagues in the meeting room, to getting inspired to create new possibilities for potential customers outside in the real world. In other words, give a potential customer the tools to progress forward in life. Then, you have created value out of innovation or value innovation.
“We must abandon the idea that customers have a laundry list of “needs”. Instead, we should see customers as having only one need: to make progress within the systems they belong to.” Alan Klement, Jobs To Be Done Guru and author.
Focussing on developing new products/services alone is not enough. The designer’s holistic mindset will allow the opportunity to understand that a company is actually supporting a user or customer to become a better version of themselves with products/services. This disciplined dedication to unlock the potential of your customers is often the secret ingredient to unlock the next growth horizon for a company and reaching a successful product market fit.
“A business model describes the rationale of how an organization creates, delivers, and captures value.” Business Model Generation, by Alex Osterwalder & Yves Pigneur.
To apply the rational of a designer in developing the next business model innovation, one must consider the three lenses of design thinking: desirability, feasibility and viability. Those three components assist business designers in developing a wonderful conversation between the basic building blocks of an organization’s business model and potential customers with the sole purpose of creating value out of an innovation. Whats more, this conversation enforces the adoption of the dual nature of those three lenses, by allowing the business designer to appreciate the integral efforts of an organization’s sense of progress with a potential customer’s sense of life progress.
To better appreciate the duality nature of the desirability, feasibility and viability of designing the organization’s rational to create, deliver and capture the next value innovation, ask yourself: is the company ready for the execution of this business model? If we are creating what is desirable by our potential market, are we capable of feasibly delivering it? will it offer a viable outcome? is the culture of our organization ready to support the execution of such model?
Lets break it down:
Desirability: When you are tackling desirability, you need to appreciate how a certain group of people (customer segment) evaluate progress when they hire certain product/service (i.e. their Jobs To be Done). But on the other side you need to understand how ready is your organization’s culture and how much is it willing to contribute to that progress. In other words, a business designer should empathize outwards (people as potential customers) and inwards (people as the organization itself).
Main Design Balance Criteria: Customer Progress (JTBD) Vs. Organization’s Perception to delivering that progress (Culture)
Feasibility: Once the desirability is evaluated and understood, one must approach the operational/managerial capacities needed to achieve it carefully. A business designer must balance between how to achieve the customer’s expectations (customer point of view to desirability delivery) while reducing/eliminating all unnecessary operational/managerial activities to ensure efficient resources utilization and mobilization to meet customer's expectations (organization’s point of view on delivering that desirability efficiently).
Main Design Balance Criteria: Customer’s point of view to desirability delivery Vs. Organization’s desirability to deliver it point of view.
Viability: Viability is simply the design’s outcome of a value proposition’s desirability versus the managerial/operational efficiency to deliver it. The business model design outcome. It is the critical balance between efficient operations and maximum value creation of a desirable product/service to a potential customer. It is the quantification of desirability (price) versus the qualification of feasibility (costs). It is the answer to the question: are we creating value innovation? are we offering a profitable value proposition? will the business model innovation be sustainable?
Main Design Balance Criteria: Customer Value Maximization (Value Proposition Vs. Price) Vs. Organization Value Maximization (Costs Vs. Revenues).
Design thinking your next business model innovation is a unique approach to designing the next engine of growth. It offers a business designer the ability to harmonize the pulse of both customer and organization perceptions while co-creating an innovative business model. A series of actions taken by the customer and for the customer, by an organization and for the organization.
It is what I like to call: “Action Innovation”.
Design think your next business model innovation!