Innovate and Transform Business Models with a Simple Framework based on Design Thinking

I notice when discussing with my clients and business leaders, a strong interest to use a simple framework in order to create or transform their businesses. Though several business blueprints do already exist, like Lean Startup, and the Business Model Canvas, IDEO has developed one of the best and simplest frameworks for business model innovation I was given to use. My appetite was so vivid, that I went the effort to be certified with IDEO-U on the matter, including the Design Thinking practice. Each time I describe it during my conversations, my interlocutors are willing to jump on it right away. So I thought it’d be valuable for you, C-Level, Execs, Entrepreneurs, or business leaders, to get an overview.

In a nutshell, the framework invites the business designer team to rapidly prototype how the business will create, capture, and deliver value. So let me help you picture this, put some words and your brain around it.

Using IDEO’s Business Blueprint Framework

For a business to succeed, all of its components must work in harmony. This post introduces a framework that reveals how the different elements of a business work together, and how to use the framework to create or transform your business in a project and during workshops.

As a good rule of thumb, assume this journey will span over a 5 weeks period, each week focusing on one aspect of the framework. If your business is a bit complex, or your company is an Enterprise, it may take a bit longer, up to 13 weeks, to allow for enough iterations and smooth collaboration across your organization’s silos.

Week 1: Scope your effort

First, frame the questions you’d like to answer:

1. Is the problem you’re trying to solve affecting enough people to make a business out of it:
   Can it be viable?
2. Do you have access to, or prior knowledge about, the people you’re hoping to serve:
   Do you know what can make it desirable?
3. Is the business you want to start relying on existing technology or capabilities? Make sure you’re not waiting for a breakthrough in science before it can come to life.
   Is it feasible?

In order to work on it, gather the proper group of people, cross-functional, that will be helping you during the journey.

Week 1 will be dedicated to familiarizing the group with the core concepts, scope your work, learning how to use the framework, and the 3 steps process for prototyping different components of the business: frame a question, build a prototype and collect evidence.

You’ll be issuing a name, a vision for the business, and the target customers. In other words: what your business solves, who will most benefit from it, and who are the stakeholders in the entire value chain today. This acts as a starting point and anchor for subsequent steps. A draft business blueprint is created to state any assumptions early.

Three Steps to Prototyping: Q-P-E

When creating, capturing, and delivering value, your group should take a divergent approach creating many different ideas and options, before converging on a preferred solution. This design thinking approach creates more opportunity for innovation in the business model development than with comparative methods like the Lean Canvas or the Business Model Canvas from my experience.

The three steps in the prototyping process are:

1. Frame a Question based on assumptions
2. Build Prototypes to test with people
3. Collect Evidence to inform future business decisions

Week 2: Creating Value

The following week, you’ll be looking to understand how the business can create value by creating a value proposition and offer that is desirable for customers. Allow me to stress here FOR CUSTOMERS, not you, your team, or your management team. Maximizing your empathy with your customers’ job-to-be-done (JTBD) will make a huge difference.

• Offer: What Products or services will you make and deliver?
• Value Proposition: What customer need(s) are you fulfilling? What is the unique promise your offer provides?

The value proposition and offer are ideated, designed, prototyped, and tested with the target customers. As an example, design 1-page adverts for many value propositions and test these with your target customers. Then build fast one prototype of the offer, making it as tangible and real as possible as the creation of a short TV or radio advert to test with customers.

Week 3: Capturing Value

Now you’ll be evaluating how the business can capture value so that the business is viable. See that the way your business makes money is made of two connected parts: how people will pay (your revenue model) and what they’re willing to pay (your price). Learn how your business’s revenue model and price can be designed to provide even more value for your customers. Surface the most important costs related to the parts of your business that fulfill your business’s value proposition to customers.

You are encouraged to ideate, design, prototype, and test many different revenue models and streams, product pricing, and business costs among about the 20 different ones that we could identify, with examples of famous companies for each one to illustrate. The exercise here is to stretch your thinking on ways the business can make money.

• Revenue Model & Price: How will you make money? How and what will you charge your customers?
• Costs: How much does it cost to create and deliver your offer?

Week 4: Delivering Value

During this phase, you’ll be assessing how the business will deliver value and get the offer to customers and what the required key relationships and systems are to bring the offer to market. Learn why the sales channel is an excellent place to apply the principles of Business Design, and expand your thinking about the ways you can use the channel to improve how your business delivers value.

• Channels: How will you get your offer to customers?
• Partners Ecosystem: What key relationships and systems will help you create and deliver your offer?

These channel and partner options are designed, prototyped and tested with customers to see if they align. Potential customers’ purchase journeys and pivotal moments in the journey are designed, prototyped, and tested.

Week 5: The Business Blueprint

In this last stretch, you’ll be issuing The Business Blueprint as a 1-page canvas that describes the business model with all its components duly prototyped, tested, and iterated until a version stands as your best design through the triple lense of Desirability-Feasibility-Viability.

It describes the business’s potential target customers, offer, value proposition, revenue model, cost, channels, and partners. It’s a living document that is constantly updated from the beginning as more information is learned over time.

This blueprint is obtained through a repeated cycle of divergence – explore multiple options and ideas – and convergence – using desirability, feasibility, and viability as lenses – until the group can tell they’re ready to act upon it, make the necessary changes to drive it through the organization happen. The blueprint is a living document and is meant to always evolve as you’ll learn new things while executing it, as much as your customer needs evolve and your ecosystem changes over time. Come back to it on a regular basis, during off-sites, kick-offs, and workshops. These are healthy team strengthening exercises, but more importantly will give you the ability to stay innovative, agile and adaptable.