The future can’t be designed in Excel

Last week’s Ideas Inc conference about startups (see the best projects here) was also an opportunity to make our brain discover new ideas. When I hear “design”, I think either of old-school engineering or hipsters making nice and useless drawings on InDesign. Two speeches by Teddy Zmrhal of IDEO, the design and innovation agency, and Yves Pigneur, author of Business Model Generation. taught me to learn another meaning to this word, linking it with both business and user experience.

Remapping user experience

What about design ? Usually thought as an extension – at best – of engineering, IDEO proved that design must leave its supposedly technical grounds to embrace business more globally. The objective ? Move brands and government services from a KPI driven experience to one focused on the human experience.

A few examples to show how design thinking works :

• A user-centric hospital

Ever been to an hospital with, say, a broken leg ? Then you should remember easily a messy noise, and, above all, the ceiling. Remapping entirely the patient journey framework, IDEO found that the experience was amongst the worst possible. Why not put white board on the walls of every room, to allow the staff and family to communicate if the patient’s on care or asleep ? Projecting information on the ceiling also proves a source of ease for a patient already stressed by being in the hospital

• From the process to the emotion : the case of airport screening

You may be the most honest citizen in your country, any crossing of a border at an airport remains a bad experience. Endless queues, bad looking security officers, and if you forgot an important piece of flying paper, then your journey ends before it even began. Here IDEO made for the Transportation Security Administration in the USA, both an exercise of interior architecture and communication to help people understand the process they’re going into, to separate clearly the tasks and time them, and explain the apparent austerity of people working to screen thousands of travelers a day. The initial discrepancy comes from that transportation authorities think of this checkpoint as a process, whether we all think of it as an emotion. Design thinking is here a bridge to find common ground between two ways of thinking the world.

• Keep the change with Bank of America

An empathy bar camp – the methodology used by IDEO to be able to focus on user experience – showed that housewives didn’t care as much on saving money than keeping easily their accounting. Bank of America offered them to round up their financial transaction for speed and convenience, in a campaign called “Keep your change”. The difference between the actual spending and the round up goes to the savings account. As a result, the bank gained 12 million new customers, and hit a 93% consumer retention score.

Business models too, can undergo design thinking

Design teaches us to proceed in three steps : design an idea, a concept or a product. Then, make a prototype out of it. Test it eventually, and you can proceed to production.

Many businesses don’t take this into account, and create a comprehensive production line without any external output or confrontation. Think of the Quallcom FLO TV device, almost certainly you don’t remember about it, but it’s a 800 million dollars net loss. Yves Pigneur, author of Business Model Generation, gives a lesson of design thinking and hands-on business model creation.

[youtube http://www.youtube.com/watch?v=d5OOQefHp84]
A guiding principle ought to be the following : no great idea can be qualified as such if it didn’t meet yet its customer. This will be the starting-point of a 9-step methodology to create a business model, which, in turn, could be your business plan. Let’s check this with two examples : Le Cirque du Soleil, and Nespresso, two hits of the past decade in their own industry.

The 5 first steps are front-end, and in direct connection with the customer

• First and foremost, the customer. Who are you targeting ? Le Cirque intends to recruit opera and concert goers, Nespresso, people making coffee at home.
• The value propositions, the product offered. Le Cirque offers a new kind of circus experience, without animals or stars. Nespresso promises to facilitate and enhance your him coffee experience.
• The way of delivering the value, your sales channels. Le Cirque goes through usual internet and traditional ticketing systems. Nespresso sells (or used to sale) only online, cutting costs, getting data and offering a new service.
• Customer relationship management : are you changing it ? Nespresso makes you a member of its Club and offers the sense of a community.
• Revenue stream : how do you expect to make money ? Le Cirque tickets are high priced, and the same goes with Nespresso (Swiss people now spend 600 to 800% more on home coffee than before)

The 4 last steps are back-end, and connects the company with B2B stakeholders

• Key resources you need. Le Cirque has 20 different shows running and a new way to provide an artistic atmosphere. Nespresso has a patent on its coffee capsules so that he could deter competitors from entering the market (this is changing fast, see Ethical Coffee Company, for instance).
• Key activities, the big process you need to master. Le Cirque’s logistics allows him to produce high quality shows and recruit talents. Nespresso knows how to produce capsules by the millions to ensure all is delivered in due time.
• Key partners with whom you work. Le Cirque is linked to Las Vegas scene, Nespresso to retailers and IT/e-commerce experts.
• Cost structure. Both Le Cirque and Nespresso are value oriented, their objective is to provide a premium (the other possibility is to focus on low cost and lean enterprise)

As a result, Le Cirque du Soleil and Nespresso are among the most profitable companies in the world. But wait, you’re not done yet ! Your business model has still a long way to go, especially by meeting its first customers, and then transform into a business plan.

You can download the Business Model Canvass in Creative Common and play with it, I think it’s a great tool to avoid major blind spots. It also helps to prepare your speeches, again, you’ll have 3 minutes max to convince an audience you’re on a good path 🙂

Martin Pasquier