Business strategy and design thinking are converging into a new approach for solving business challenges known as business design. This makes sense given that design-driven companies continue to outperform their peers and also explains why so many management consultancies are rapidly acquiring design agencies. A decade ago, business design was an emerging role in design agencies. Today, however, it’s an established role in consulting and moving in-house as well.  

How do We Define Business Design?  

Business design brings a design mindset and methodology to solve business challenges and deliver viable business models. At Prophet, business design is a method for developing products, services and ventures for our clients that are differentiated in the market and able to capture value for their businesses.  

Why is Business Design the Modern Approach to Business Building? 

There is some magic that happens when you bring the design process of divergence and convergence to bear on business challenges. It gets business leaders out of the mindset of competing over existing market share and reorients them to think about what new value could be created based on the emerging needs, motivations and behaviors of all humans involved in the value creation equation – customers, users, employees and communities. 

At Prophet, when we embark on a business design project, there are some key things we set out to do:  

• Achieve a deep understanding of business challenges faced 
• Bring a design mindset and use design methods to solve them, including creating new methods 
• Develop iterative plans and models based on real-world scenarios to understand what will be most viable in the market 

The goal of business design is to ensure that neither of these scenarios happens: 

• The business minds determine all the requirements for a new offering and bring designers in to beautify the interface 
• The design team creates the end-to-end user experience of a new offering and brings the business people in to give it a price tag 

The defining characteristic of the business design function is to constantly balance the needs of users with the needs of the business, in the near and long term. A business designer will always ensure that business logic informs any design-build or seek out to better understand the logic that supports their design – whether that be loyalty leading to higher customer lifetime value, efficiency leading to higher transaction volume or something else entirely. On the other hand, a business designer will see through a short-term value capture scheme if it has the potential to hurt the long-term viability of the business. So, it is about balance on two fronts: managing desirability and viability and managing the time horizons. 

Three Examples of Business Design Frameworks 

Here are some business design frameworks that show what it looks like to solve business challenges with design methodology: 

Human-Centered Opportunity Sizing = Total Addressable Problem 

The Total Addressable Market (TAM) approach to opportunity sizing assumes that companies are constrained by the industry in which they operate today and that to outgrow the market, they must take share from incumbents. In contrast, the business design approach to opportunity sizing is based on the Total Addressable Problem (TAP), which a business is trying to solve for users. Rather than starting with an existing industry, such as the hotel industry, it starts with a user need, like the ability to feel at home anywhere in the world. Framing the opportunity based on what you are helping users achieve creates new possibilities and use cases.  

Take Airbnb for instance. Airbnb’s growth far exceeded the budget travel market that it originally entered. Now, Airbnb competes with luxury hotels, short-term rentals and travel services outside of lodging. Uber is another great example. It started from the other end of the spectrum as a high-end car service but through a TAP framework, it far outgrew the taxi industry and instead became a micro-mobility platform with food delivery, bike rentals and healthcare transportation. Lastly, Amazon started in e-commerce, but through a TAP framework, grew to provide convenience in all aspects of household management, including building a smart home ecosystem.  

Human-Centered Commercialization = Incentive Design 

Business design creates outsized value by aligning emerging behavioral and business models and then makes value exchanges that are sustainable and durable in the long run. Before folding in 2013, late fees accounted for 16% of Blockbuster’s revenue. If the way a business captures value is in direct opposition to its users’ best interest, that is not a sustainable business model.  

Netflix’s subscription model, however, aligns user and business interests. The more you watch, the more data Netflix gets on what you like to watch, the better they can recommend additional content. Subscriptions lock in recurring revenue, enabling Netflix to make bigger bets in developing new content. And it is not just about value for customers. Netflix invests heavily in creators with new stories to tell and targets those stories to the right audiences. One of the most important activities in business design is creating growth feedback loops in which new demand drives new supply while increasing value for all stakeholders. 

Human-Centered Planning = Test and Learn 

Business design preferences emergent and iterative models over linear and deterministic planning. You can learn more about the viability of a new business in one meeting with users than in a week of modeling future cash flows based on historic assumptions. A business designer is comfortable with the knowledge that an assumption being off could mean a 10x change in revenue projections. They will not boil the ocean perfecting those assumptions, instead, they will put something into the market and see what happens. Of course, businesses need cash flow today to explore new problems to solve for their users tomorrow. A business designer will think about what can be EBIT-accretive today, while also investing in experiments to rapidly test and learn what new business models might be most relevant in the future. 

Check out our most recent research – Building Business Resilience Through Innovation

Fostering cross-department and client collaboration in projects are critical through the design process to keep teams motivated, clients engaged and to ensure the forward momentum of the project. Such an approach also reduces friction and contributes to the well-being of the team.

At Prophet, our one-team approach is encouraged in all engagements with start-ups through to big corporations. The conclusion we’ve been able to draw is that the design and innovation process gains real momentum and buy-in with the involvement of cross-functional collaboration. But every organization is different and creating that space to empower teams is a frequently faced challenge, along with accessing stakeholders for decision-making and bringing the wider team along on the journey.

“The design and innovation process gains real momentum and buy-in with the involvement of cross-functional collaboration.”

Read on as we break down what collaborative design is, the benefits and offer our tips to encourage collaboration and foster creativity.

What is Collaborative Design?

Collaborative design is the process of designing as a team. Great products and experiences aren’t created in a vacuum. A diversity of profiles is needed, from designers, analysts, researchers, and product managers, fusing their talents and expertise leads to the creation of something truly meaningful and something that genuinely connects business and user needs.

The Benefits of Product Design Collaboration

There are many reasons why great products need great collaboration, here’s some of them:

• Shared goal or vision – all team members are kept well informed and on the same page throughout the process.
• Creative and innovative solutions – gathering feedback and considering diverse perspectives from a variety of specialized skillsets enable next-level solutions.
• It gives everyone a voice – collaboration is good for culture too. It helps to instill democracy within your creative process and signals that all voices matter.
• Greater buy-in – if you create a process where everybody has greater agency in contributing input, it makes it harder for team members to disengage.
• Saves time – continuous and open communication prevents misunderstandings and costly revisions so that the product can be brought to the development stage sooner.

A 6-Step Guide to Organize and Improve the Collaborative Design Process

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Our Top Tips to Get Started

1. Cross-Function Teaming

The team is everything, and the more disciplines involved, the more robust the ideation, feedback and iteration. Even better, create a cross-level team, a good idea can come from anywhere.

2. Problem First

Focus on the problem first and be flexible on how you get to the solution. Align with the team on the outcomes that you are trying to drive and let the team be flexible with the process.

3. A Flat Planet

Design is a team sport, and with that, the team should be empowered to move, design and dictate the course of the project. A hierarchical approach will slow sign-offs, meeting availabilities and permission to move forward. Empower the team, do great work.

4. Rhythm is Everything

Working together at a similar pace is key. Set a cadence that works for the project and the team’s wellbeing. Consider the teams’ lifestyles as they are as – if not more – important as the project plan itself.

5. Team Health

Carve out the space and time to run team retrospectives and have open conversations about team health.  At Prophet, our teams use a framework called SCARFS – standing for Status, Certainty, Autonomy, Relatedness, Fairness and Sustainability – to help guide those conversations. Every week, each team member rates how they feel on each factor on a scale between one and five. This is critical to understand the health of the project and the team. Often this moment of reflection will provide a deeper insight to refine the process for upcoming sprints.

6. A Vision of the Future

Have a brave vision of the future, challenge the team to look beyond the project and deeply question the future state and impact that the work will have.