An Introduction To Business Design (1/4)

9 min readJul 3, 2023

A Guide To Business Design | Part One of Four (1/4)

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Business Design is just as it sounds; the design of business. I think of Business Design as a meta-practice that integrates the best of design thinking, lean start-up methodologies, traditional business strategy — like ‘Competitive Strategy’ by Porter, modern business strategy — like ‘Blue Ocean Strategy’ by Kim and Mauborgne, and innovation strategy — like ‘Ten Types of Innovation’ by Keeley, Pikkel, Quinn and Walters.

Business Design has been described as the most important skill of the future. As technology continues to accelerate change and we enter a new era where artificial intelligence may bring as much disruption as the internet, the need for Business Design has never been more vital.

The need for Business Design.

Conceptually business is simple. A business is a system for commercial, professional or industrial activity. A business takes inputs, does some activities, creates outputs, and sells them. Every business is in a perpetual state of creating products or services, widening margins, lowering costs, increasing sales, increasing customer lifetime value, and building operations to support all of the above (digital, physical, hybrid). The better a business does at these things, the more it can grow, scale, take market share, make money and drive up its valuation. Business Design defines precisely how this input, action, output and monetisation stuff works.

Technological and scientific advances accelerate the pace of change and give us the means of creating all manner of new products, services and business models. Before the internet, almost every business worked with physical inputs like wheat, land, or materials. Today the world’s most valuable resource is information. We’ve all heard data is more valuable than oil.

Eight of the world’s top 10 companies by market cap are technology companies, whether software, hardware, platforms, infrastructure or a mix. Business Design is focused on inventing new business models or transforming existing ones by leveraging and implementing new technology, science and ideas. The scope of Business Design can range from making small-scale improvements, like digitising a manual business process, to a complete market revolution, like Netflix.

The accelerating pace of change and exponential growth in computing power

If you’ve been involved with technology startups or innovation at any time in the last 30 years, then Business Design is likely native to you. Investors expect you to have done a lot of hard thinking and analysis upfront. In any decent pitch, you outline what you want to build (product, service or platform), how you’ll launch it, how you’ll make money from it, and a story about why people will care. You may even make a demo or have a working prototype. Once you raise money, you start building and selling. This is the earliest stage of Business Design.

Business Designers are architects.

When constructing a house, the first professional hired is an architect. They draft plans for the entire structure, top-down and bottom-up. The architect aligns their plans to a shared architectural vision with their stakeholders. They think deeply about all aspects of a home in advance. They have a broad knowledge of the various specialisations required to finish the home, from electrical to plumbing. Their plans become the foundation for all other professionals to work on the property. Even though an electrician might occasionally disparage the architect’s decisions (my step-father is an electrician who frequently expresses his displeasure with architects), at least the electrician has a plan to follow.

I’m not a residential architect, but it seems to me that the fundamentals of Business Design are similar. Business Design is the unifying discipline that harmonizes the various facets of business construction, whether marketing communications, product development, or technology architecture. Strategy is an explicit plan for what to do, why, and how. Business Design is just a design-led and design-centred approach to business strategy.

Imagine trying to build a house with no plan. Most businesses aren’t built with such precision, and so they underperform. Businesses that invest in Business Design capability and use it to define strategy and tactics will outperform their competitors. Yes, the business still has to execute the strategy regardless of whether it was created with Business Design (most strategy is not executed, which is another story entirely), but fundamentally the better your plan, the better chance you have of winning.

The goal of Business Design is to make other business models obsolete.

Business is simple in concept and extremely complex in execution. To be successful, you have to integrate and execute marketing, sales, communications, brand, product, service, customer support, technology architecture, e-commerce, digital applications, user experience, media, governance, operations, leadership, and everything else, all in a financially positive way.

We live in a world where awareness is in short supply, and consumer expectations are through the roof. To win, it’s best to be deliberate about what we put into the world and why. It’s impossible to innovate or succeed without cohesive Business Design. You can't do business if your technology architecture doesn’t support your target customer experiences, like omnichannel retail. You can't do business if your brand doesn’t effectively position you in the market. You can’t do business if your product sucks. You may get away with it for a time, but a better business is coming for you right now — guaranteed. You won’t know it until it’s too late.

Most businesses are not fundamentally designed to leverage modern technology, science or ideas. Businesses established a decade ago were created in a vastly different market landscape. They may have been cutting-edge once upon a time, but they aren’t today. The iPhone 5 was state of the art ten years ago. Today, an iPhone 5 is only state-of-the-art as a punchline for an obsolescence joke. The same will be true of the iPhone 15 in ten years.

We have seen generational shifts with the internet, cloud, and now artificial intelligence is likely the next frontier. ‘Disruption’ refers to the creative destruction in markets where modern businesses destroy the established market players. We all know the cliche examples: Netflix vs. Blockbuster; Uber vs. Corporate Cabs. There will be more. The true goal of Business Design is to make other businesses obsolete. And that, folks, is a LOT of fun.

The next great wave of creative destruction is about to occur.

To illustrate the absolute necessity for continuous Business Design, look no further than ChatGPT. How many businesses have been designed to harness the capabilities of large language models (LLMs)? How many businesses are machine learning (ML) native? Most businesses have yet to address data challenges from the 90s and 2000s, let alone organise their proprietary data to leverage machine learning meaningfully and profitably.

What new business models will artificial intelligence and machine learning enable? Which existing models will they disrupt? Which big player will be the first to go bankrupt due to AI? How can small, medium and large businesses leverage these technologies to gain a competitive edge over rivals and safeguard their market position against emerging AI-first competitors?

I don’t have the answers but I know how to find them — Business Design.

A helpful way to think about change.

Businesses that make Central Processing Units (CPUs) and Graphics Processing Units (GPUs) constantly invent new technical architectures. Every new generation of architecture aims to increase the number of processor transistors, thereby giving it more computing power, whilst also seeking to optimise how the components interact, like refining how data is cached so that memory speed is greatly improved. Each new generation contains exceptional engineering that builds on the previous generation or completely supersedes it. Once a new architecture is devised, it must undergo the necessary productisation, manufacturing, testing and market launch.

Since 2010 NVIDIA has released Fermi, Kepler, Maxwell, Pascal, Volta, Turing, Ampere, Ada Lovelace and Hopper architectures, with the latest designed for accelerated computing for Enterprise AI. Every generation gets more powerful and ideally gets cheaper (alas, we gamers have felt the burn of many of these generations of GPUs on our wallets). Look at NVIDIA’s stock price in the last 12 months; their focus on producing GPU architectures specifically for enterprise AI has skyrocketed their valuation. Imagine if NVIDIA stopped making new architectures every few years — they’d be out of business, fast.

The lifespan of any business is subject to the rapidly changing landscape of markets, technology, and consumer preferences. I think it’s odd that many executives and managers don’t think about evolving their business architecture in the same way that NVIDIA or Intel plans to invent new component architectures.

I like the rule of thumb that there should be minor Business Design updates frequently and major Business Design updates every 3–5 years. This doesn’t mean throwing the whole thing out and starting again — it means recognising that the world is changing quickly and committing to continuous improvement.

The cold hard facts.

The case for Business Design is evident if you consider the following data.

Out of the Fortune 500 companies listed in 1955, only 53 still exist today. The rest have either gone bankrupt, been acquired, or disappeared some other way.
52% of the companies on the S&P 500 in 2000 no longer exist.
The average tenure of companies on the S&P 500, which was 33 years in 1964, narrowed to 24 years by 2016 and is projected to shrink to just 12 years by 2027. At the current turnover rate, approximately half of the S&P 500 companies will be replaced over the next decade.

Average Company Lifespan on S&P 500 Index

We live in a world of natural selection. Things that adapt will survive. Things that don’t will die. Businesses don’t exist in their own space, separate from reality. Natural selection is just as relevant in business as it is in biology.

Business Design is the domain of master generalists.

Today the lines are blurring between management consultancies, design studios, venture incubators, PR, digital agencies and advertising/marketing agencies, if not wholly blurred already. Digital transformation, customer experience, and service design are different expressions of the question, ‘What is the optimal business design for a particular outcome?’. They all fall under the umbrella of Business Design, which strives for a design-led approach that prioritises human needs, builds sustainable and scalable business models, and embraces creativity, testing, prototyping, transformation, and change as integral components of doing business.

I’ve been a founder and leader of creative digital agencies, an innovation consultancy and an R&D / SaaS company. As a strategy, creative, design and commercial lead, you become skilled in multiple domains and gain broad experience by working with brands and organisations of different sizes at different scales in different industries.

The best Business Designers can create high-level strategies for many aspects of business, from brand to marketing to technology, through operations, management and finance. You’d be hard-pressed to find an exceptional Business Designer that hasn’t founded or been intimately involved with building businesses. There’s no substitute for experience. The real juice comes from experiencing spectacular failures and outstanding successes yourself.

If you want to learn more about Business Design and its origins, I’ve included some recommended reading in the links below.

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This brings us to the end of Part One. I’ll discuss some of the best frameworks and methods for practising Business Design in Part Two.

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This article is one of a four-part series focused on Business Design. Part One is an introduction to Business Design. Part Two is an overview of relevant frameworks and methodologies. Part Three discusses the relationships between Business Design, knowledge and technology. Part Four is a case study of Business Design in practice.

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