The Explore: an approach to generate new business concepts — what we mean and how we do it
By Suze Melissant
Banks need to innovate. The rise of fintech means that banks cannot merely rely on their current offerings. Instead, they also need to come up with new business concepts for new products and services. These business concepts must meet the needs of their customers, both current and future, whilst providing new revenue streams. This sounds familiar if not obvious, right? Yet how does one generate new business concepts?
Within the Strategy & Innovation department of ABN AMRO, we aim to shape the bank of the future and develop new business concepts that exceed the scope of traditional bank-operations and respond to trends, developments, and technologies. To that end, our department has developed a discovery phase called the ‘Explore,’ in which we come up with such new business concepts. This article explains what we do within an Explore and what we mean when we talk about generating new business concepts.
The Explore: ABN AMRO’s way of generating new business concepts
Within ABN AMRO we have developed our own innovation approach called ‘DARE’ which is based on well-known methodologies such as Design Thinking, Lean Startup, Agile, and our own learnings. DARE includes, among other things, a structured innovation process. This process starts with the Explore in which new business concepts are generated. Subsequently, these business concepts (now called initiatives) continue in our so-called ‘innovation funnel.’ This innovation funnel is a ‘stage-gated’ (see image below) process which de-risks the development of initiatives. After every stage, the initiative gets assessed to decide, if continued, investment is warranted and if it will thereby ‘pass the stage-gate.’
An important element behind ABN AMRO’s process is to build a portfolio of many initiatives and ‘make many bets’ which translates to continuously generating new ideas and keep betting on those that prove relevance. Therefore, we are constantly researching how we can improve both the quantity and quality of the business concepts that exit the Explore stage.
The Explore process
For every Explore we suggest a tailormade approach in terms of recommended process, time, and resources needed. However, most often an Explore is executed according to the Double Diamond approach of the Design Thinking methodology. This is a problem-solving and human-centered approach that consists of diverging and converging phases. Breaking down the Double Diamond, the goal of the first diamond is to solve the right problem. The focus of the second diamond is to solve the problem right.
An Explore usually starts with a rather broad scope, based on certain relevant trends, developments, and needs we observe in the market. This scope, the starting point, could also be a certain technology or solution or be much smaller, for example, a very specific and already identified customer problem. Applying the Double Diamond approach of Design Thinking, a team then spends several weeks, depending on how specific the starting point is, thoroughly researching the trend, uncovering customer needs, and ideating to create a long list of potential ideas. From this long list of ideas, a selection is chosen and worked out into more concrete new business concepts that are ready to enter the funnel. As Davidsson has put it well in the quote below, we consider a business concept as something that goes beyond just merely an idea, but as a complete encompassing of the imagined service.
“A business concept is an imagined combination of product/service offerings, potential markets or users, and means of bringing these offerings into existence.” (Davidsson, 2014)
The Business Concept Canvas
In September 2020 I started as a graduate student at ABN AMRO with a specific focus on the Explore. Throughout my research, I found that a shared understanding of what the Explore was and what it should deliver was lacking. Therefore, I designed the ‘Business Concept Canvas’. It represents the process that precedes it and captures all relevant information that is gained during an Explore.
The canvas probably reminds one of the well-known ‘business model canvas’, yet for an Explore, the business model canvas asks for very specific information one simply doesn’t have yet in an Explore. As mentioned above, we put as much emphasis on the problem as we do on the solution within an Explore. To that end, both are equally covered in the designed canvas. The image below shows a simplified version of what the Business Concept Canvas looks like. The blue blocks represent the first problem-solving diamond while the green blocks represent the solution direction.
Blue boxes; solving the right problem
In the first diamond the problem, context, and target segment are addressed. This information is first researched during the Explore. The problem statement is placed right underneath the ‘This is it’ box since the problem can be perceived as the raison d’être of why a new product or service should be developed in the first place. The context box should provide additional information and (data-driven) facts supporting the problem, explaining the ecosystem, competitors, and alternative solutions. The target segment box is placed both practically and symbolically in the middle. Symbolically, since we take a human-centered approach and design new services for our (future) customers. Practically, because the segment is central in both the first and second diamond.
Green boxes; solving the problem right
We don’t need to know in detail how our solution works at this point. What we do want is to have a solution direction. In the target segment box, among other things, the most important ‘pains’ and ‘gains’ of our customers are listed. The solution box provides clarity on what is the most important ‘job to be done’ to solve these pains. For example, if our problem revolves around financial literacy for young adults, a solution direction could be ‘an app that empowers young adults to make financially responsible choices.’ But what we want to know here is not how the app works, for all we know the solution could still change into a website, course, book, or podcast, but we want to know how a solution will help our target group achieve a certain goal or help them overcome a challenge. At the same time, to make clear how such a solution could work and to raise the discussion, it is strongly recommended to build a simplified prototype. Do make sure the discussion will be about what the solution provides, and not if the button should be placed left or right.
In the box ‘value streams and operations’ preferably a schematic overview is placed of how value can be transferred between parties. A very straightforward example; users pay for our app. In addition, it captures what parties and potential partners could be involved, how we could make money, for example with a subscription model, and possible costs and resources. The bottom right box ‘what is in it for the company’ addresses the strategic fit, timing, and relevance of proceeding with this business concept.
The key for every successful product or service is to take into consideration feasibility (blue), viability (green), and desirability (yellow). Feasibility is about ‘is it realistic to think that we can do this?’ With viability, we consider ‘does it have the potential to be profitable in the longer-term?’, and desirability challenges us to think about ‘do we address the needs of our target group?’. The overlap of these three is also referred to as the ‘innovation sweet spot.’ When both generating and evaluating business concepts, this sweet spot should be kept in mind.
To conclude
Within the Strategy & Innovation department, we try to find new ways to provide value to our (future) customers and shape the bank of the future. In this article, it is explained how we have a process called ‘the Explore’ which is based on the Double Diamond approach of Design Thinking to develop new business concepts. To get a unified understanding of what is meant by a business concept, ‘the Business Concept Canvas’ was designed. This process and canvas should provide structure and guidance. However, always keep in mind that these are means to work towards a goal; developing new and innovative services that help customers do or achieve something.
Read more
Do you want to read more about the Explore? Read Suze’s follow-up article ‘The Explore: an approach to generate new business concepts — lessons learned about choosing the right team, environment, and topic’.
About the author
Suze Melissant, Innovation Consultant at the Strategy & Innovation department of ABN AMRO.
In September 2020 I started as a graduate student from the master Strategic Product Design from the TU Delft to research the process of coming up with new business concepts within a corporate environment. Within the Strategy & Innovation department of ABN AMRO, this phase is called ‘The Explore’. I was positively surprised to see designers, innovators, and people from all kinds of backgrounds work together in a creative and innovative way in the relatively rigid environment that banks are known for. Since September 2021 I have taken the role of Innovation Consultant with a specific focus on the Explore and I am pleased to now be part of this team. I am very motivated to continue researching and improving the way we generate new business concepts and help shape the bank of the future!
