by Thomas Brandenburg
The notion that you can use design thinking to design a fresh business model is still foreign to many companies, requiring a combination of teaching and selling.
1. What language (key words or phrases) do you like to use to explain business modeling / business model innovation to an audience who is not familiar with it?
This is a timely question for me, as one of my responsibilities at Fjord is teaching Business Design in workshops called Business Design 101. There is a slide I use titled Key Words / Phrases that signal the need for Business Design with these keywords/phrases:
2. What are some key lessons you learned over the years in business model prototyping?
Fjord’s Business Design group is part of our “Service Strategy” capability, and to understand an innovative end-to-end service, you need to “prototype strategy” as well as the business model. This helps us address one of the key lessons learned over the years; the difference between the “why” and the “how & what”. A business model can fundamentally be described as how a business creates, delivers, and captures value, which does a great job of addressing the “how & what”, but often misses explaining “why” change is necessary. Connecting these dots and describing the value proposition using a human-centered POV is crucial, and not just for broad disruptive innovation initiatives—many new product or service can benefit.
3. What are some core activities or tools you use to do business modeling? What are the most useful method(s) or framework(s) for capturing the value of a new service to share with the organization?
There are so many tools and methods available to business design strategist that it can be overwhelming. The Business Model Canvas (initially proposed by Alexander Osterwalder and his consultancy Strategyzer) has gained a lot of traction, Doblin’s Ten Types of Innovation is a good reference, The Art of Opportunity has many great tools including Spark Cards for Business Models / Revenue Models / Pricing Mechanisms, Oliver Gassman’s Business Model Navigator provides a powerful guide, so on and so forth…
Ultimately I find you need to accomplish these activities to successfully model a business:
The culprit is the ever present gap between vision and execution. When I begin a project, I often write a quote on the room’s whiteboard from the statistician George Box: “all models are wrong but some are useful”.
4. What are some of the main reasons business modeling for new services fails?
The culprit is the ever present gap between vision and execution. When I begin a project, I often write a quote on the room’s whiteboard from the statistician George Box: “all models are wrong but some are useful”. I would extend that to “all BUSINESS models are wrong but some are useful”. Designing a business model is making an informed assumption of a successful future state. The next part is helping craft the financial model, which is the deep quant equivalent of that assumption built in detail by collaborating with a business analyst. Ensuring the plan stays on track and is executed as envisioned is a challenge, and even if done well, can be undone by rapid unpredictable shifts in the market. In the end no one can truly predict the future.
5. What are some of the sources skepticism or fears business leaders have when applying design thinking and prototyping new service business models? And how do you address them?
This a two fold concern: first is design thinking is highly sought after by companies but rarely understood, second is the notion of a new service-business model which means change. Change is difficult for individuals and even tougher for business (especially massive global companies). The notion that you can use design thinking to design a fresh business model is still foreign to many companies, requiring a combination of teaching and selling. Elon musk probably doesn’t need business cases or business models …but most other companies do (or will).
Bonus Question-Do you have any last thoughts you would like to share with our readers on business modeling for new services?
Whether implicitly or explicitly, all designers have impact on the business model. When combined with design thinking, we can view business models holistically as the relationships and exchanges designed to deliver value repeatedly in a multi-stakeholder system.
Related 5 x 5s