What is Business Design?

How significant is it for business transformation?

Business design has already become the new rage, and it undoubtedly is the next big thing. In the last few years, we have seen an exponentially increasing focus on design. Businesses across the globe focused on creating products and services with a user-centric approach; however, business design is way different than traditional or pure design thinking.

Let’s first delve into the reasons why pure design thinking fails to create a sustainable business model and how business design is the answer to this problem that looms large.

Why ‘Pure Design Thinking’ is the thing of the past?

The business model has always been an indispensable part of any business and rapidly changing technological conditions, market-trends and emergence of start-ups forced companies to develop themselves on the innovation front. Failing to do so would mean loss of relevance for the business in the rapidly changing business circumstances. Innovative business models with well-thought-out novel ideas are the need of the hour. Hence, business design comes into the picture.

So, what exactly is Business Design?

There are several published books on business design in the last few years, and it would be unjust to go by just one definition of business design. Since business design is more of a process, it is vast in itself; however, there are specific parameters to help you get started and to set a benchmark.

Business design-

- Is about creating and capturing value.

- Encapsulates several tools and methods to design and test the methods and processes for the development and innovation of sustainable business models.

- Is about transforming value proposition into real business value.

- Is about making sense of fresh value creation by thinking through the relations.

So, in a nutshell, business design is a collaborative user-centric approach that perfectly blends design and management to help businesses craft, strategize and deliver a viable business model based on user research, market analysis, strategy and user experience.

User Research and Analysis

Customer Sentiments and Iteration

As stated in the post earlier as well, business design is more of a process or methodology itself. The best part is that business designers have a free hand to think in novel ways. Tim Brown, the chairperson of IDEO, says, “Design thinking is a human-centred approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.”

An excellent success example and significance of business design is IDEO U’s experience while working on a project in the fashion sphere in Asia. Kerry O’Connor, one of the business designers at IDEO U, who was working on the project, reveals that her team had the permission to come up with new ideas while working on the project.

They discovered that the majority of people do not feel comfortable with their wardrobes for various reasons. It could be new jobs or lack of time to shop or special events for which they wanted new outfits. Team IDEO U wanted to figure out which thought or experiment gets the most traction and there were more surprises for them in-store as they ran about six different targeted ads on social media. What they perceived would resonate more with female consumers in-fact attracted more male customers. It was a quick, cheap and effective way to figure out what market segment it appeals the most.

Kerry says that the economics of business is always two-sided: the inflow of money and the amount of money required to create that value. As a business designer, she still looks for that room to play within that.

Warby Parker, a renowned online retail company, is a beautiful example of how a new entrant can take an industry by storm with business design. The value proposition of Warby Parker is pretty simple, and that’s allowing customers to buy prescription glasses for just $100, which would otherwise cost them about $400. The high prices in the market were established in the market by companies such as Luxottica.

They have exclusive licenses to sell glasses for brands of the likes of Ray-Ban, Prada, Oakley and Chanel. It may come as a surprise to you that a frame and lenses usually cost less than 10 pounds. These market inefficiencies were studied well by Warby Parker. They decided to design their frames and lenses after vertically integrating the value chain. They skipped several intermediaries and passed on that cost advantage to their consumers. They were also able to position themselves in the fashion business. They offered new services such as home try on and made buying new glasses at low prices.

PepsiCo’s product Pepsi Spire was a result of innovative business design. Pepsi Spire, a digital drinks fountain that enabled customers to customize their drink with up to 500 combinations. This idea attributed to the team of designers, scientists and marketers who came up with the idea of a touch screen dispenser to facilitate a more interactive experience with the PepsiCo brand. Innovatively collecting the customers’ desires from fountains, vending machines, and consumables vouch for the fact that business design plays a critical role to improve customer satisfaction.

Conclusion:

Business design is more of seeing things from a fresh perspective, through another lens to enable managers, strategists and designers think more creatively to develop new ideas with a free hand. What’s more? It is a systematic way to put the viability of novel approaches to another series of litmus tests to come up with even newer perspectives or outcomes. Business design is a new rage, and nonetheless, it is evolving day by day.

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