What is Business Design?
Business design is a way of operating that combines the tools of business thinkers, analysts, and strategists with the methods and mindsets of design. Business designers think about how every element of the business model affects the consumer and client experience.
In our most recent Creative Confidence Series chat, Coe Leta Stafford, Co-Managing Director of IDEO U, sat down with IDEO business designers Amy Bonsall and Kerry O’Connor to answer questions from the IDEO U community, and to dig into how they became business designers, what kinds of tools and mindsets they rely on in their work, and how they apply them to real business challenges.
At IDEO, we believe that you can design the parts of a business just like you can any product, service, or brand. As Amy points out, it’s about realizing that it’s not just product design that makes a company successful in the market—it’s about the business model, the revenue model, the operations, the strategy, and even the IT. It’s about blending the rigor of traditional business strategies and tools with design, all in the service of meeting a human need.
So what exactly is business design?
It’s a way of operating that combines the tools of business thinkers, analysts, and strategists with the methods and mindsets of design. Business designers think about how every element of the business model affects the consumer and client experience. “Business designers have permission to think in new ways,” Kerry says. “So we go in with optimism, focus on people, and come back and apply an analytical lens to things we think are exciting and compelling for people.” A business designers job is not just to be the viable lens of things, but to figure out how to translate human needs into business goals. It offers a way to experiment with meeting both the needs of the business and the value they want to bring into people’s lives.
How do you prototype different elements of your business?
Not so differently than you might start prototyping a product. It’s about creating an environment where you can see how people would react with your new business or offer if it were already established. That could mean creating a landing page or series of ads to see which potential customers might be attracted to it, and what kind of messaging draws them in.
In one project, an IDEO team was working with Sensis, the Yellow Pages of Australia, where they noticed a pain point around busy professionals struggling to grab a quick lunch from local food vendors who only accepted cash. This meant that many people spent their break time waiting in line at the atm to then wait in another line for lunch or coffee. So they thought, what if they could create an alternative, where they didn’t have to wait in life for cash or goods? “We’re always looking for the question that gives our business the most risk,” Amy says. Once the riskiest questions are identified, business designers use prototyping as a way to test their assumptions early in the process of creating a new business or service in order to learn quickly and iterate.
To test their idea, they threw together a quick prototype of an app-based service that would allow people to text in their orders and cut down on wait time. They advertised this new text message based food order and delivery service on posters and used one team members phone to accept orders and send pickup times. It only took a matter of hours to prototype, and by the end, vendors were proactively asking to join in and even willing to continue using the prototype until the full service was built.
How do you determine if a business is economically feasible?
“The economics of a business are two sided—the money coming in, and the money it takes for you to create it,” Kerry says. “We’re looking for where there is room to play within that.”
In a project with Pillpack, a company that sends pre-packaged, labeled medications to people at their homes, the IDEO team prototyped their offering by setting up a booth in a mall, and seeing how many people they could get to sign up for the product at different price points. “We put a lot of effort into figuring out where is there room? We want to charge as much as people will tolerate without alienating them.”
It’s about figuring out how much a good or service is worth to your consumers. Brand is one consideration. Does a company have permission in the marketplace to pull off that kind of product at that price point? As Kerry notes, Volkswagen came out with a premium car, but no one wanted to pay for a $100,000 Volkswagen. “They didn’t have permission to do something really premium,” she says.
“Creativity loves constraints. Put a budget and time limit on your prototyping, and see where it gets you.”
How have you applied prototyping to marketing?
Marketing is an easy place to start with small, low-cost experiments. A few years ago, IDEO was working with a company that was trying to help consumers use less energy, but they weren’t sure which message was going to resonate. So they went to one block in one neighborhood, and every week, they left a door tag with a different message on it—one about saving money, one about helping the environment, and the third about saving more energy than your neighbors. It turned out, the third resonated the most. “You can do this with small populations to get the directionality,” Kerry says. “The first message you put out there is likely not going to be the right one.”
How do you use business design to create something totally new?
When Kerry was working on a project in the fashion space in Asia, her team was given permission to come up with a completely new offer. They discovered that many people don’t feel comfortable with their wardrobes, and for a lot of reasons: they had gotten new jobs, or had special events, or didn’t have time to shop. “All of those are valid, but each of those value propositions will resonate with a different customer,” she says. To figure out which would get the most traction, they created six targeted ads on social media, and ran them for two weeks. To their surprise, an offering they thought would resonate with female customers attracted more male customers. “It was a wonderful, cheap and fast way to figure out what part of the market this was going to resonate with the most,” she says.
As people at IDEO like to say, creativity loves constraints. Put a budget and time limit on your prototyping, and see where it gets you.
How do you apply business design when things are already going well?
You can constantly be looking for clues about how people are engaging with your business. A few years ago, a company called Fab.com started out as a gay social network. On the side, one of the founders created a part of the site that was devoted to products and services that he promoted every day. It was getting so much traction, that they pivoted the business to focus on that. However, it doesn’t always have to be about a pivot, Amy says. Sometimes the answer lies in expansion.
Learn how to apply the skills and mindsets of business design to your next product, service, or business. Join our Designing a Business course.
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