What is Business Design?
This blog post is part of a series of posts around Business Design. You’ll find the first post “Where does business design come from?” here.
In my previous post, I explained where business design comes from and its relevance as management and design consultancies merge. . Now, as promised, I would like to get into the nitty gritty and describe what a business designer is, what they do and and how they better the design process.
By its simplest definition, we can say that business design applies design and design thinking to business problems with the objective of bringing innovation to life. Putting this into the context of a design process, we can say that the business designer has three main functions:
- frame, direct and/or inform the design process through a business lens to ensure design solves business problems effectively.
- translate design solutions into value and impact through a language that business stakeholders are familiar with to prove design provides solutions to business problems.
- apply human-centered methodologies to strengthen business and financial components of design work to create services and products that are viable.
1. To ensure design solves business problems effectively, business designers frame, direct or inform the design process through a business point of view.
In the late 90s, Sony’s PlayStation won the console race against its competitors Sega Saturn and Nintendo 64. Then in early 2000s, PlayStation 2 was launched and soon became the best-selling gaming system of all time. Nintendo was having a rough time and understood it couldn’t compete head-to-head with Sony and Microsoft in making faster-better-greater consoles . They needed a new strategy to avoid failing for three generations.
To figure out how to make their next console a success, they applied a philosophy previously articulated by Game & Watch founder Yokoi Gumpei: “Lateral Thinking with Withered Technology.” In this philosophy, “withered technology” refers to a mature, cheap and well understood technology, and “lateral thinking” refers to the process of finding radical new ways of using such technology. Out of this process came the Nintendo Wii — while the Wii was much less advanced technologically than the PS3 and Xbox 360, it offered a simple yet very playful gaming experience. And not only was the Wii cheap to make (unit production cost for Wii is estimated to be around $160, while the PS3 cost $800 to make), it also reached a much wider audience that its competitors by going beyond the traditional demographic of young males.
The success of the Wii shows that understanding the competition in order to set the contextual frame for designers is crucial for the success of a new service/product. Sometimes designers can become detail oriented in their work and forget about the bigger picture ; one of the reasons why critiques from different points of view are crucial. Business designers frame the design process from a perspective that is different, yet complementary to other disciplines , in order to ensure the team is moving in the right direction.
Below are activities that the business designer can conduct to frame, direct or inform the design process:
- The business designer can help frame the problem from a different perspective by analysing the context and environment in order to identify external factors to be considered during the design process. Example activities include Trend Analysis and Competitive Analysis.
- Similarly to how design research explores how people feel about a certain theme, activity and/or an existing service, business design can gather insights about the business realm of an organisation. Both types of findings can then be gathered together to better identify opportunity areas and generate solutions. Example activities include Ecosystem Mapping, Process Flow Mapping, Business Model Canvassing, and Product Audits.
- Generating and prototyping a multitude of ideas is an exciting step to go through during the design process. However, it is equally important to make sure the design process is moving in the right business direction, focusing on ideas that are viable alongside the wider business strategy. Example activities include creating Prioritisation Frameworks and Roadmapping.
- During service and/or product implementation, it is a common pitfall to forget the original intent. The business designer can make sure that the developed capabilities and features are consistent with the original value proposition and business objectives. In this case, the business designer will have to take her/his product manager hat.
2. To validate design solutions to business problems business designers translate design work into its value and impact using language that business stakeholders are familiar with.
The pitch decks made back in the days by Facebook, Airbnb, Uber or Tinder don’t boast about how easy to use or beautiful their design is, they outline the value they bring to their users, backed up by numbers. Design agencies are often filled with like-minded creatives who are used to making points to one another. It can be challenging explaining design decisions and intentions to clients who are unfamiliar with design process.
Business stakeholders, may not be in the design detail, and often don’t spend their time manipulating service blueprints or prototypes. Instead, these stakeholders speak in numbers , business plans, market analysis and KPI dashboards. To work together effectively we need to adapt our language to make the design work easily digestible for non-designers . One way to do this is to correlate customer value with business value, ideally using numerical values.
Here are activities that the business designer can do to translate design work into its value and impact through a language that business stakeholders are familiar with:
- Articulate the benefits brought by the service/product to be able to measure them during prototyping and implementation. Business designers can do this through Customer/Business Value Tree, Benefits Case, Proof of Value, Opportunity Sizing, Business Case.
- A similar type of measurement work should also be conducted at the product-level, once the service or product is ready for implementation. Whatsapp is currently testing the idea that “what you measure is what you’ll get”: instead of asking for a subscription fee, they are tracking the time for response by businesses to charge them if they reply after 24 hours since a user’s last message — “a genius way to create a growth feedback loop,” according to TechCrunch. The business designer can structure frameworks to embed KPIs within the service, as Whatsapp has done, so that they can track and analyse them during prototyping and once launched, using KPI Frameworks, KPI Tracking & Analysis.
3. To create services and products that are viable, business designers apply human-centered methodologies to strengthen business and financial components of the design work.
“Would you keep using Netflix if it asked you to pay for every single film you watched instead of a simple monthly subscription?”
Business designers ask these questions of users and design teams, pushing them to define business-oriented elements like revenue streams and pricing mechanisms. A service designer works in conjunction with end users to ideate, prototype and iterate concepts. The business designer conducts similar activities, but their focus is on the business model of the service or product. Here are activities that the business designer can do to strengthen business and financial components of the design work through human-centered methodologies:
- Business modelling exercises during ideation or concept refinement workshop help define the elements listed below, that then should be tested with prospective users: revenue stream, pricing mechanisms, payment mechanism, cost structure, partnership model, value network and creation mechanism.
Through these three functions the business designer filters the design process through a practical lens, translating the sometimes abstract world of creativity into tangible, measurable strategies. Of course, the business designer’s influence varies from project to project, depending on a range of factors ; scope and subject of the project, the client’s context and expectations, experience of the business designer, availability and involvement of the business designer, etc. The table below provides an overview of how a design project can change depending on the amount of influence given to the business designer.
Business design is a hybrid role that blends practices from several fields: service design, design strategy, product management, business analysis and management consulting. This is one of the reasons why it is such a hard role to define and why each organisation has a different interpretation of what a business designer is (fairly similar to how product management is viewed by different organisations, as explained by Brent Tworetzky).
In an age where innovation consultancies and design studios are being acquired by traditional management consultancies (read my previous post if you missed that bit), more and more designers are working alongside management consultants. Due to this context, I often hear people say:
What is the difference between a management consultant and a business designer?
There needs to be a more solid answer than “business designers don’t wear suits everyday.” So I went back to the principles of design thinking to determine a better one. I feel that the core difference is in the motivation: while management consultants tend to be driven by financial margins and market trends, business designers are driven by human needs. Business designers are practical and empathic towards both the user and their colleagues. Both aspire to efficiencies at scale, but get there via different routes. To make sure the difference between the two is clear, I took some design thinking rules from relevant references and applied them to business design.
The business designer is human-centred, instead of being function-centred or profitability-driven. In Design Thinking: Understanding Innovation, Hasso Plattner, Christoph Meinel and Larry Leifer define four design thinking rules. The first is the human rule, which states that:
all design activity is ultimately social in nature, and any social innovation will bring us back to the ‘human-centric point of view.’
This first rule touches on the mindset of a business designer. While all businesses do exist to make revenue and eventually a profit, they won’t be sustainable without a human-centered approach.
The recent Facebook data crisis is an illustration of what can happen when a business starts ignoring its users’ rights. On the other hand, the recent thrive by BestBuy is a great counter example, shifting from a retailer to an in-home advisor. By implementing a customer- and employee-centric strategy, Best Buy has had 22 consecutive quarters beating analysts’ earnings estimates (I strongly recommend reading this article on Bloomberg Businessweek — even CEO Hubert Joly is applying human-centered methodology by working at a store in Minnesota for a week).
Where a management consultant may prioritise financial margins and business efficiency, the business designer should aspire to create businesses that prioritise people and their rights to privacy, happiness and health. Good ethics can be a competitive advantage, as mentioned in my previous post, DMI’s Design Value Index demonstrated that the financial performance of design-centric companies outperformed the S&P 500 by a significant margin. The business designer needs to maintain empathy and dialogue with the people they design for, collaborating and iterating together.
The business designer is driven by human needs, instead of being driven by market trends. Plattner, Meinel and Leifer’s second design thinking rule is the re-design rule which states that:
all design is re-design; this comes as a result of changing technology and social circumstances but previously solved, unchanged human needs.
In other words, design thinking assumes that human needs remain unchanged with time while socio-technical elements constantly evolve. The business designer therefore avoids solving for optimisation and innovates by building solutions that answer intrinsic needs.
The current car and mobility industries illustrate how an industry can drastically evolve despite human need remaining unchanged for centuries — moving from point A to point B. The car industry is under threat since the idea of sharing a car has been popularised in lieu of owning a car. On top of that, urban transportation is today much easier thanks to a very wide range of options — from bicycle sharing (e.g. Cityscoot), bike sharing (e.g. Ofo), scooter sharing (e.g. Bird Rides) and peer-to-peer taxi services (e.g. Lyft) to public transit apps like Citymapper (that is now is a transport provider with its own Smartbus). Autonomous cars and taxis are also just around the corner. They are all, however, just new technology-empowered means of transport.
In my opinion a deeper level of innovation should happen in the next decade: how convenient would it be if you could have a ‘master’ travel card for a monthly fee, that would give you access to all kinds of means of transport? This is what’s called MaaS or Mobility as a Service, the idea of aggregating all of these means of transport to offer them as one single service. Whim, a service active in Helsinki and Birmingham, is at the forefront of this new mobility realm. For €599/month, you have access to unlimited public transport, taxi, car rental and city bike. Imagine a future where this subscription could include trains and flights!
This example demonstrates the potential of innovation when building services and businesses around human needs, instead of focusing on optimising existing solutions as is typical in management consultancies. It is the reason why the business designer should collaborate with design researchers and service designers and their involvement with end users to come up with innovative solutions based on human needs.
The business designer should be biased toward action, instead of spending time on stakeholder management. The third design thinking rule stated by Plattner, Meinel and Leifer is the tangibility rule:
making ideas tangible always facilitates communication and allows designers to treat prototypes as ‘communication media.’
In other words, it is essential to transform ideas and concepts into prototypes, to test them and validate them in real life environments to avoid misunderstandings and unwanted surprises.
Staying within the mobility industry, Google-owned Waymo seems to be working out its final pricing structure for its self-driving taxi service. As mentioned in The Verge, Waymo’s app is currently showing placeholder prices “to solicit feedback from its early riders” as part of their testing phase (Spotify is also conducting similar initiatives). Cadillac, on the other hand, piloted an entire business model called BOOK by Cadillac in New York in mid-2017. This vehicle-as-a-service offer lets people get access to a portfolio of fully loaded Cadillac vehicles for a monthly subscription fee of $1800 , a bold move from a historic car manufacturer. After validating their offering, BOOK by Cadillac has today expanded to Los Angeles, Dallas and Munich. The movement has taken off and competitors like Volvo and Porche have each launched their equivalent.
While a business designer’s area of interest might be rather abstract, it shouldn’t be an excuse to not take part in the prototyping and testing process. A business designer should have this bias toward action as much as a UI, UX or service designer. They should work together with other designers to test and validate components of the business model. In other words, “talk less, do more” (one of IDEO’s seven values).
The business designer should embrace ambiguity, instead of being scared of uncertainty.
The ambiguity rule, in which design thinkers must preserve ambiguity by experimenting at the limits of their knowledge and ability, enabling the freedom to see things differently
This is the fourth design thinking rule that Plattner, Meinel and Leifer describe in their book. This last rule touches on how the business designer collaborates with their colleagues as well as other stakeholders.
When coming up with ideas and concepts in a collaborative manner, it is crucial to have a safe environment to allow everyone to be as creative as possible. While creativity can lead to ambiguity and discomfort, it is essential to be optimistic about it. Instead of saying “I’m worried about how we can make revenue from this,” the business designer should be excited about making others’ ideas successful. By shifting attitudes from ‘should’ to ‘could’, we can enable a healthy collaboration during the design process where ambiguity is ever present.
In my previous experience at FJORD, business designers are very collaborative with their peer designers, while management consultants tended to struggle to be comfortable with ambiguity. There are definitely overlaps in the end contribution of a management consultant and a business designer. However, the different mindset of the roles affects how solutions are approached, as explained above. One isn’t greater to the other; each role has a skill set that compliments the other, they should be brought together to collaborate where the context of the work allows, both roles have complementary skill sets and should be wisely combined by taking into account the context of the work such as the project’s scope, other designers’ backgrounds and etc.
I hope it is now clearer to you what business design is, what a business designer does, how a business designer can influence a piece of work and how a business designer is different to a management consultant. In the next blog post, I will delve deeper into the activities and tools that business designers use, outlining steps and resources for the existing business designer or those thinking of getting into the field.
References & Further Reading
- How Design Thinking will fix Design Thinking by Bert Brautigam
- Why Business Design is the Most Important Skill of the Future by David Schmidt
- Why the Right Mindset is Crucial to Becoming a Successful Business Designer by David Schmidt
- Facing the turbulence. The value of Business Design by Sketchin
- What is Business Design — and why is it the most important design job of the future? by John Oswald, Global Principal, Advisory Team at Futurice
- So You Want to Be a Business Designer? by Misa Misono
- An Insider’s Guide To Business Design At IDEO by Rohini Vibha
Design Thinking & Human-Centered Design Principles
- Design Thinking: Understand — Improve — Apply (Understanding Innovation) by Christoph Meinel, Larry Leifer and Hasso Plattner
- Design Thinking Principles by Stanford d.school
- The seven tenets of human-centred design by the Design Council
- The 7 Values That Drive IDEO by Tim Brown, CEO of IDEO
- Design Kit: Mindsets by IDEO.org
- 3 Ways to Get Comfortable with Ambiguity by IDEO
Nintendo Wii & ‘Lateral Thinking with Withered Technology’
- Nintendo’s Little-Known Product Philosophy: Lateral Thinking with Withered (“Weathered”) Technology by Adam Ghahramani
- How Nintendo Delights Its Customers by Peter Merholz on Harvard Business Review
- Nintendo Wii’s Growing Market of “Nonconsumers” by Scott Anthony from Innosight on Harvard Business Review
- Responding to the Wii? by Andrei Hagiu and Hanna Halaburda on Harvard Business Review
- What Can We Learn from Nintendo? by Tim Huse from Innosight on Harvard Business Review
- Here’s who won each console war by Mike Minotti on VentureBeat
- Nintendo said to profit on Wii production on The Register
- Wii Manufacturing Costs Down By 45% by Luke Plunkett on Kotaku
- Wii manufacturing costs ring up to just $158? by Darren Murph on engadget
- Private companies want to replace public transport. Should we let them? By Mark Wilding on The Guardian
- Why Helsinki’s Whim is no fad… by Enrique Dans
- ‘Netflix of Transportation’ is a trillion-dollar market by 2030 — and this Toyota-backed Finnish startup is in pole position to seize it by Tom Turula on Business Insider
- Understanding business model disruption in the mobility industry by Olaf Sakkers
- Good Bus (Part 1/3), Bad Bus (Part 2/3) and The Responsive Network (Part 3/3) by Citymapper
- Volvo, Cadillac and Porsche drive subscription model growth on the Financial Times
Testing & Experimenting
- Spotify to Raise Prices in Norway in Test of Customer Loyalty by Lucas Shaw on Bloomberg
- Waymo begins experimenting with self-driving taxi prices by Andrew J. Hawkins on The Verge
- Startup Pitch Decks
- Design Value Index by the Design Management Institute
- Best Buy Should Be Dead, But It’s Thriving in the Age of Amazon by Susan Berfield and Matthew Boyle on Bloomberg Businessweek