Discourse on Design Thinking & Entrepreneurship (part 2)

Business Model Canvas — http://www.cogniview.com/blog/improve-your-business-modeling-with-a-pdf-to-excel-converter/

(originally written in the fall of 2013)

Regardless of whether or not it was the designer’s goal, creating an innovative product or service concept puts you under the label of Entrepreneur. In embarking on this venture, brilliant design thinkers construct what’s known as a Business Model: a framework that describes the rational of how an organization creates, delivers, and captures value (economic, social, or other forms).

There are dozens of types of business models with new ones being named frequently (my favorite being the Freemium Model in which you essentially offer a basic service or product for free, with the option to purchase a superior addition to that service or product). Design thinkers believe startups should use business models instead of business plans, because they allow agile and opportunistic founders to keep score of the pivots in their search for a repeatable business model.

Regardless of whether or not it was the designer’s goal, creating an innovative product or service concept puts you under the label of Entrepreneur.

A popular form of the Business Model is a new take on it called the Business Model Canvas (shown above), which is a map composed of nine building blocks: 1. Customer Segments; 2. Customer Relationships; 3. Channels; 4. Value Propositions; 5. Key Resources; 6. Key Activities; 7. Key Partnerships; 8. Costs; 9. Revenue Streams.

Before our business model (or after, depending on how gutsy you’re feeling) great design thinkers study all the Intellectual Property around their concept. They do this to verify whether or not their potential competitors have any Intellectual Property that could negatively affect them, and if not, to claim it as their own. There are four kinds of Intellectual Property:

1. Patents — A set of exclusive rights granted to an inventor for a minimum of 20 years.
2. Copyrights — Giving the creator of an original work exclusive rights to it effective over the entire lifetime of the creator plus 50 years.
3. Trademarks — Recognizable signs, designs, or expressions which identify products or services of a particular source from those of others, which are always effective but must be renewed every five years.
4. Trade Secrets — Usually overlooked (because, well, its a secret); A specific compilation of information which is not generally known or reasonably ascertainable by which a business can obtain an economic advantage over its competitors/ customers.

So at this point let’s say you now have a brilliant, innovative product. Your next step is to secure backing (money, resources, associates) through presentations, i.e. go in front of a (potential) group of investors, and try to pitch your idea, product or service. Before you walk in, you make sure you have perfectly framed your story, planned your delivery, and developed a great stage presence.

Something important you should understand off the bat is that you will be getting (inaccurately) stereotyped by these presentees (which we refer to as Catchers), whether or not you are aware of when its happening. Appearance, speech, mannerisms, knowledge; You’ll be put into pre-conceived boxes from people who most likely have no formal, verifiable, or objective measures for assessing creativity. However, knowing this happens allows us to play to-and control our catcher’s expectations subjectively.

Brilliant design thinkers make the catchers feel as if they are enrolled in the creative process, and that they’re participating in an idea’s development. We do this by taking on one of three persona’s (or a combination) that past successful Pitchers (i.e. those that pitch their ideas to these Catchers) use:

1. The Showrunner — Confident, knowledge-packed and charismatic, they deliberately level the power differential between themselves and their catchers.
2. The Artist — They invert the power differential by having a wonderful vision, but portraying that they don’t have the appropriate knowledge to achieve it.
3. The Neophyte — They plead ignorance and present themselves as eager learners. Neophytes completely exploit the power differential.

At the same time, brilliant design thinkers try not to fall into any of these presenter categories:

1. The Pushover — Doesn’t stand behind his or her idea whatsoever.
2. The Robot — Is too formulaic and bland.
3. The Used-Car salesman — An obnoxious, argumentative and insistent character.
4. The Charity Case — Extremely needy; They don’t really care about their idea, they just want a job or anything you can give them.

Accomplishing our goal of impressing these Catchers nets us development funding, in which the Catchers themselves experience five stages:

1. The Idea Stage — the business concept is now fully established and brainstormed.
2. Feasibility — Does this work? Now’s the time to see.
3. Verification — We now know it does/doesn’t.
4. Demonstration — We scale up our operations; the product is refined and tested on a broad set of consumers.
5. Commercialization — The Catchers succumb, and divulge major investments to achieve full-scale production of our design concept.

Brilliant design thinkers understand the Theory of Adoption: The science behind getting their concepts accepted and promoted by consumers. The Theory of Adoption is a three level paradigm, with the first level being the Micro level. The Micro level is composed of four processes which we call Diffusion. It goes something like this: The process by which an innovation (process 1) is communicated through certain channels (process 2) over time (process 3) among the members of a social system (process 4).

Over this process, the consumers we’re trying to reach progress through five stages:

1. Knowledge — “I’ve heard about that”
2. Persuasion — “It looks tempting/I want to experience it”
3. Decision — “I’m going to purchase/experience it”
4. Implementation — “I’ve purchased/experienced it”
5. Confirmation — “I loved it/hated it, I will/ won’t experience it again”.

The second level of the Theory of Adoption is known as Meso, in which our adopters are categorized into the given sections:

1. Innovators — the first to adopt an innovation.
2. Early Adopters — the second fastest after innovators; Folks who are typically younger and have the highest degree of leadership among the other categories.
3. Early Majority — those who adopt an innovation after a varying degree of time.
4. Late Majority — those who adopt an innovation after the average member of society.
5. The Laggards — the last to adopt an innovation, which little to no opinion leadership.

The last level of the Theory of Adoption is the Macro level, which is portrayed as an s curve (the yellow curve above): A logistic function in which we visually analyze how the market share will eventually go from initial adoption to the saturation level. On this visualization, we typically find that Innovators make up the first 2.5% of our maximum numbers of adopters; Early Adopters 13.5%; Early Majority 34%; Late Majority 35%; Laggards 16%. That makes up the products/services lifecycle.

The transition from Design Innovation Processes into Entrepreneurship is, as previously stated, seamless. Without innovative design, your success in an entrepreneurial endeavor is shot. It seems like a lot to remember, but if you’re ambitious and serious about creating something that you hope could impact the world (which if you actually read this I assume you are :p), this information will become second nature to you in no time.