The Business Design process is the core of the Business Design approach. It is the embodiment of entrepreneurial thinking hunting for business opportunities. The process can best be described as an "agile" development and learning process for building new business models, products, services or software applications in one to many succeeding iterations of 10 weeks. Each phase of the process gives all stakeholders involved a clear structure and guidance, which is specifically important when everything else is risky and uncertain. In each iteration, we design or improve a future scenario as a new business model, product, service or software (= Design), based on a short discovery phase (= Discover) and validate the scenarios with scientifically designed experiments to learn which aspects of the scenarios work and which don't (= Validate). Based on these learnings, a project sponsor is empowered to make clear decisions on how to proceed in the project (= Decide). In a nutshell, three decisions are possible:
- STOP Facts tell us that we should better stop wasting our time because our ideas will never work.
- ITERATE We gained insights how to improve our ideas and the way we work together as a team.
- GO Wow. The results from the previous iteration indicate that our ideas are ready to be launched on the market. Go!
To kick off a project based on the Business Design process, a Project Charter (= Setup) is required to define some basic elements of the project such as motivation, objectives, schedule and stakeholders. The output of a Business Design process is a management proposal consisting of the results of each phase (e.g. business model, hypotheses and results of experiments, prototype), suggestions for the sponsor and the decisions made by the sponsor.
The overarching goal of every Business Design project is to find simple answers to the sponsor's motivation and objectives for the project. This, however, is rarely an easy task and usually leads to a journey with ups and downs as illustrated below. Be prepared for this!
The Business Design process is structured in five distinctive phases that enable us to develop, learn and make clear decisions as described before:
- Setup: First, you set up your project by ensuring the support of decision makers (= sponsors) within your company, defining the focus of your project and building the right team.
- Discover: To better understand the context of your project, you discover the space of your customers, competitors and technologies related to your project focus.Above all, you want to understand, what ”pains“ your customers have today when using existing solutions.
- Design: Based on insights gained, you create business ideas as ”pain relievers“ and translate them into a business model to define how to create value for both your customers and your organization. Furthermore, you plan how to validate the business model.
- Validate: To further develop your business model, you explore open questions and test hypotheses to validate key elements of your business model.
- Decide: Finally, you decide with your internal sponsor how to continue with the project. Often two to three iterations are needed to achieve the necessary knowledge and maturity for market launch.
These five phases constitute an "iteration" of a Business Design project, which encompass 1 to X iterations. The following poster shows the Business Design process in large (PDF):
ps: We love to introduce this process in workshops and trainings with our "Business Design Process Carpet" & friends.
Before and After
Business Design is an essential part of a modern innovation management system and bridges the gap between ideas for new products, services or business models and the first revenue on the market. Thus, there are other activities going on before Business Design and also after to roll out and scale the new business.
Research & Development
Before you kick off a project based on the Business Design process, there are usually other activities that can be summarized as Research & Development. In this phase, the main purpose is to explore and analyze interesting starting points for new business models, products, services or software applications. Good sources of inspiration to get these starting points may include:
- Company's vision / "Picture of the Future"
- Strategic goals
- Customer insights (e.g. from service center)
- Technological capabilities (e.g. new sensor)
- Political or social trends (e.g. sharing economy)
- Data and resources (e.g. own customer data)
- IP and patents (e.g. own inventions of R&D lab)
- Competition (e.g. great new service)
Dedicated research groups collect data, information and insights on a regular basis and initiate ideation workshops with the goal to be curious, create and prioritize ideas. Sometimes, a dedicated scoping phase / project is required to consolidate research results and enhance them with first business insights derived from customer interviews, desk research and expert discussions on meaningful questions in order to better prioritize and prepare a Business Design project. This scoping phase / project is optional and only needed when developed ideas are just too vague and fuzzy and not ready to be fed into a Business Design project. Keep this option in mind!
The ideas will be prioritized based on dimensions such as "strategic fit" and "distance to success" (see portfolio matrix) and translated into "Project Charters". The "Project Charters" are the starting point for every Business Design project. The assessment of these Project Charters can be:
- Strategic fit
- Distance to success
- Size of business opportunity
- Accessibility of data and resources
- Level of uncertainties
After a successful completion of a Business Design project with 1-X iterations, the sponsor of a project may have decided to launch a new business model, product, service or software application on the market. If you have done a good job so far, the biggest uncertainties should have been eliminated. From now on, it is about 100% execution - as efficient as possible. As a preparation, there are some more steps needed to turn the results of a Business Design project into something you can sell with existing or newly established structures.
Since a Go-to-Market process depends heavily on the type of innovation, we just list here very typical activities:
- Involvement of business line(s) or setup of new division
- Hand-over to Product Development Process (PDP)
- Setup of final production / engineering / implementation
- Quality management
- Preparation of marketing materials
- Preparation of sales channels / regions
- Training of sales staff etc.
A more detailed view on the flow of activities from research, Business Design to the market is illustrated in this picture.