1. Business ModelDESIGN

2. Businesspeople dont just need tounderstand designers better; they need to become designers. need to become designers.Roger Martin, Dean, RotmanSchool of Management 3. Design A designers business involves relentless inquiry intothe best possible way to create the new, discover theunexplored, or achieve the functional. A designers job is to extend the boundaries ofthought, to generate new options, and, ultimately, tocreate value for users. This requires the ability to imagine that which doesnot exist. 4. 6 Business Model Design Techniques 1. Customer insights 2. Ideation 3. Visual thinking 4. Prototyping 5. Storytelling 6. Scenario 5. 1. Customer Insights The challenge is to develop a sound understanding ofcustomers on which to base business model design choices. 6. Building Business Model onCustomer Insight an approach that can lead to the discovery of completely newopportunities. Successful innovation requires a deep understanding of customers,including environment, daily routines, concerns, and aspirations. Adopting the customer perspective is a guiding principle for theentire business model design process. Customer perspectives should inform our choices regarding ValuePropositions, Distribution Channels, Customer Relationships, andRevenue Streams. 7. Apples Ipod Media Player IDENTIFY PROBLEM: Apple understood that people were uninterested in digitalmedia players per se. The company perceived that consumers wanted a seamlessway to search, find, download, and listen to digital content,including music, and were willing to pay for a successfulsolution, also and most companies argued that nobodywould be willing to pay for digital music online. 8. Apples Ipod Media Player SOLUTIONS: Apple dismissed these views and created a seamlessmusic experience for customers, integrating the iTunesmusic and media software, the iTunes online store, andthe iPod media player. With this Value Proposition as the kernel of its businessmodel, Apple went on to dominate the online digitalmusic market 9. how to get insights from customers? Many leading consumer companies organize field trips for senior executives to meet customers, talk to sales teams, or visit outlets. In other industries, particularly those involving heavy capitalinvestments, talking to customers is part of the daily routine.But the challenge of innovation is developing a deeperunderstanding of customers rather than just asking themwhat they want. 10. Another challenge lies inknowing which customersto heed and whichcustomers to ignore. business model innovatorsshould avoid focusingexclusively on existingCustomer Segments andset their sights on new orunreached segments. A number of businessmodel innovations havesucceeded preciselybecause they satisfied theunmet needs of newcustomers. 11. The EmpathyMapreally simple customer profiler develop a better understanding of environment, behavior, concerns, and aspirations. a customer profile guides the design of better ValuePropositions, more convenient ways to reachcustomers (Channel), and more appropriateCustomer Relationships. allows you to better understand what a customer istruly willing to pay for. 12. How to Use to come up with all the possible1.Brainstorm the (Customer) Empathy Map? Customer Segments that you might want to serve using your business model.2.Choose three promising candidates, and select one for your first profiling exercise.Start by giving this customer a name and some demographic characteristics, such as income, marital status, and so forth.3.Then, referring to the diagram on the oppositepage, use a flipchart or whiteboard to build a profilefor your newly-named customer by asking andanswering the following six questions: 13. The Empathy Mapreally simple customer profilerreally simple customer profiler How to Use the (Customer) Empathy Map? 14. Customer Profiling The goal is to create a customer viewpoint for continuouslyquestioning your business model assumptions. Customer profiling enables you to generate better answers toquestions such as: Does this Value Proposition solve real customer problems? Would she really be willing to pay for this? How would she like to be reached? 15. TASK... Try to use this empathy map for your groups existingbusiness model. 16. 2. Ideationis designing a new and innovative business model. 17. Generating New Business Model Ideas IDEATION is a creative process for generating a large numberof business model ideas and successfully isolating the best ones. Traditionally: most industries were characterized by a dominantbusiness model. Today: different business models compete in the same markets,and boundaries between industries are blurringordisappearing altogether. The Challenge: is ignoring the status quo and suspendingconcerns over operational issues so that we can generate trulynew ideas. 18. Business model innovation is about creating newmechanisms to create value and derive revenues. is to design original models that meet unsatisfied,new, or hidden customer needs. ideation has two main phases: idea generation, where quantity matters, and synthesis, in which ideas are discussed, combined, and narrowed down to a small number of viable options. 19. ideation has two main phases: 1.idea generation, where quantity matters, and 2.synthesis, in which ideas are discussed, combined, and narrowed down to a small number of viable options. 20. Epicenters of Business Model Innovation 21. The Power of What if Questions What if can help to overcome The status quo in our thinkingthat can stifles imagination. What if can help to challenge conventional assumptions withwhat if questions. What if questions help to break free a constraints imposed by current model, should provoke and challenge our thinking, also should disturb us as intriguing, difficult-to-execute propositions. 22. The Ideation Process1. Team Composition2. Immersion3. Expanding4. Criteria Selection5. Prototyping 23. Assemble a Diverse Team Ideation is team exercise and requires the participation ofpeople from across the entire organization. It also requiresinput and ideas from people representing multiple areas A diverse business model innovation team has members . . . from various business units of different ages with different areas of expertise of differing levels of seniority with a mixture of experiences from different cultural backgrounds 24. Brainstorming Rules Stay focused: Start with a well-honed statement ofthe problem at hand. Enforce rules: Clarify the brainstorming rules upfrontand enforce them. Think visually: Write ideas down or sketch them outon a surface everyone can see. Prepare: Prepare for brainstorming with some sort ofimmersion experience related to the problem at hand. 25. Warm-Up: The Silly Cow Exercise To get your teams creative juices flowing, it can be helpful to startan ideation session with a warm-up such as the Silly Cow exercise. The goal is to take people out of their day-to-day business routinesand show them how readily they can generate ideas bydisconnecting from orthodoxies and letting their creativity flow. 26. 3. Visual Thinking 27. The Value of Visual Thinking using visual tools to construct and discuss meaning. to turns its tacit assumptions into explicit information. a different discussion that give options easily by adding,removing, or moving pictures around. to enhances strategic inquiries by making the abstractconcrete, by illuminating relationships betweenelements, and by simplifying the complex. four processes improved by visual thinking:understanding, dialogue, exploration, andcommunication. 28. Visualizing with Post-it Notes Post-itTM notes function like idea containers that can beadded, removed, and easily shifted between business modelbuilding blocks. Three simple guidelines: (1) use thick marking pens, (2) writeonly one element per Post-itTM note, and (3) write only a fewwords per note to capture the essential point Discussion around which notes to place on or remove fromthe Canvas and debate over how one element influencesothers give participants a deep understanding of thebusiness model and its dynamics. 29. Visualizing with Drawings people react more strongly to images than to words.People interpret simple stick figures far more easilythan abstract concepts expressed in text. Sketches & drawing is explaining and communicating your business model based on simple drawings sketching out a typical client, their needs and environment to illustrate one of your Customer Segments. 30. Process 1. Understand the Essence1.Visual Grammar: It tells you which pieces of information to insert in the model, and where.2.Capturing the Big Picture : The Business Model Canvas visually simplifies the reality of an enterprise with all its processes, structures, and systems.3.Seeing Relationships: requires not only knowing the compositional elements, but also grasping the interdependencies between elements. 31. Process 2. Enhance Dialogue1.Collective Reference Point: tacit assumptions turns intoexplicit information is a way to improve dialogue.2.Shared Language: it is not only a reference point but also avocabulary & grammar that helps people better understand eachother.3.Joint Understanding: When experts jointly draw a businessmodel, everybody involved gains an understanding of theindividual components and develops a shared understanding ofthe relationships between these components. 32. Process 3. Explore Ideas1.Idea Trigger: Ideas placed in the Canvas trigger new ones. The Canvas becomes a tool for facilitating the idea dialoguefor individuals sketching out their ideas and for groups developing ideas together.2.Play: With the elements of a model visible on a wall in the form of individual Post-itTM notes, you can start discussing what happens when you remove certain elements or insert new ones. 33. Process 4. Improve Communication1.Create Company-Wide Understanding: employees need a shared understanding of the model so they can move in the same strategic direction.2.Selling Internally: ideas and plans often must be sold internally at various levels to garner support or obtain funding. Good imagery readily communicates your organizations current status, what needs doing, how it can be done, and what the future might look like.3.Selling Externally: entrepreneurs with plans based on new business models must sell them to other parties, such as investors or potential collaborators. 34. DifferentTypes ofVisualizationfor Different Needs 35. Telling a Visual Story A powerful way to explain abusiness model is to tell a storyone image at a time. Its better to introduce the modelpiece by piece. You could dothis by drawing one piece afteranother, or by using PowerPoint. An appealing alternative is topre-draw all the elements of abusiness model on Post-itTMnotes, then put them up oneafter another as you explain themodel. 36. Visual Storytelling Activity 37. 4. Prototyping 38. the curving glass facade of Frank Gehrys IACthe curving glass facade of Frank Gehrys IACA Facebook Wests new building, by GehrybuildinbuildinA Facebook Wests new building, by GehryMolded easy chair, appropriate for indoor/Molded easy chair, appropriate for indoor/outdoor commercial, institutional andoutdoor commercial, institutional and residential use, by Gehryresidential use, by GehryA business school building of UTS Sidney A business school building of UTS Sidney 39. Prototyping Values A business model prototype can take the form of asimple sketch, a fully thought-through concept describedwith the Business Model Canvas, or a spreadsheet thatsimulates the financial workings of a new business. a prototype is a thinking tool that helps us exploredifferent directions in which we could take our businessmodel. Making and manipulating a business model prototypeforces us to address issues of structure, relationship, andlogic in ways unavailable through mere thought anddiscussion. 40. Inquiry should signify a relentlesssearch for the best solution Type of reactions/assumptions from businesspeople: business as usual or incremental improvements are sufficient to survive in todays competitive environment. (market research study) data is the most important consideration when designing new strategic options. It is not. Market research is a single input in the long and laborious process of prototyping powerful new business models 41. Design Attitude a prototype is a tool of inquiry, This spirit of inquiry is called design attitude, becauseit is so central to the design professions, The attributes of design attitude include a willingnessto explore crude ideas, rapidly discard them, thentake the time to examine multiple possibilities beforechoosing to refine a fewand accepting uncertaintyuntil a design direction matures. 42. Prototypes at Different Scales Why do we need tocall it prototyping? First, the mindsetis different.(design attitude) Second, theBusiness ModelCanvas providesstructure tofacilitateexploration. 43. 8 Business Model Prototype for Publishing a Book 44. 8 Business Model Prototype for Publishing a Book 45. Wanted: a New ConsultingBusiness Model 46. 5. Storytelling 47. Storytellings Value Storytelling is an undervalued and underused art in theworld of business. Just as the Business Model Canvas helps you sketchand analyze a new model, storytelling will help youeffectively communicate what it is all about. Good stories engage listeners, so the story is the idealtool to prepare for an in-depth discussion of a businessmodel and its underlying logic. 48. Why Storytelling? Introducing the New --> make the new tangible Pitching to Investors --> clarification Engaging Employees --> engaging people 49. Making Business Models Tangible? The goal of telling a story is to introduce a newbusiness model in an engaging, tangible way. Keepthe story simple and use only one protagonist. CompanyCustomerCustomer CompanyPerspectivePerspective PerspectivePerspective Employee Employee Customer Jobs-Customer Jobs- ObserverObserver 50. Making the Future Tangible Stories offer a wonderful technique for blurring the linesseparating reality and fiction. Thus stories provide a powerfultool for imparting tangibility to different versions of the future. Provoke Ideas Provoke IdeasJustify ChangeJustify Change 51. Developing the StoryCustomerCustomerCompanyCompanyPerspective PerspectiveThe goal of telling a story is Perspective Perspectiveto introduce a newbusiness model in anengaging, tangible way.Keep the story simple anduse only one protagonist.Depending on theaudience, you can use adifferent protagonist with adifferent perspective. Hereare two possible startingpoints. 52. Techniques Telling an engaging story can be done in different ways.Each technique has advantages and disadvantagesand is better suited for certain situations and audiences. 53. SuperToast, Inc. Business Model 54. 6. ScenariosNext WeekSession...