Bringing hard-paced technology into an organisation’s operations is demanding. Despite the changes in the organisation and its core business and the day-to-day work, organisations must also be able to ensure the excellence of its customer experience.
In order to succeed in change, strong change leadership is needed. Understanding of the structures and processes of the organisation and its various stakeholders is needed to support collaboration and joint development. Organisation design is required to implement the changes.
Customer-oriented work on organisational change
Organisation is a system in which all components are more or less interconnected. As a result, changes in the organisation will also affect its operations in areas that do not seem obvious at first. Therefore, organisation design is a tool to construct a framework, which provides the synergies of the system (and ensures customer orientation), during the organisational design process.
Organisation design is work on change, based on design thinking, with the aim of developing a strategy that guides the organisation, its management system or structures, and its operating models, in a human-oriented manner.
Instead of service design that focuses heavily on customer experience development, organisation design focuses on the “big picture”, whereby the resulting operating models, process descriptions, or concepts linked to the system framework, create the foundation for the organisation’s operations and also its operating culture.
Collaboration and research in the core
Strategy-based organisation design always looks beyond the internal functions of the organisation, as well as at the outside world. We need to form a common understanding of what matters to our customers and how well it meets their needs. Therefore, one of the key dimensions of organisation design is gathering information through collaborative work and research.
Organisation design is both a human-centred and a quite economical way to develop organisation structures, processes and operating models in a direction that supports its transformation in a holistic way – in a customer-oriented direction.
Support for scaling customer experience
In order to create an excellent customer experience by designing an organisation’s operating models, deep customer understanding is required during design work. In addition, it remains to be determined how the varying expectations of a large customer base will first be exceeded, before the customer experience is scaled in a way where value is determined by experience.
Value is always relative; it is important to consider whether scaling such a deeply based experience into the structure, processes and operating models of an organisation is possible – and if so, how.
Could it be possible to support the scalability of the customer experience by combining customer-driven structures, technology opportunities and deep customer understanding through organisation design?
Taking a rational and analytical approach in strategic decision-making often lacks customer input. Adding a human-centric design approach to the equation enables the identification of new opportunities that both reflect customer needs and support strategic goals.
In our daily tasks we use both hemispheres of our brain in equal measure: the logical, analytical and rational left hemisphere, and the creative, imaginative and intuitive right hemisphere. In the same sense, when making business decisions, both perspectives should be considered equally important: the rational/analytical business-approach and empathic/innovative design-approach.
With business design you can bridge the gap between these two perspectives by studying the requirements of both the user and the business. In a nutshell, business design brings the needs of customers and users into strategic decision making.
Business design combines two perspectives: the rational/analytical business-approach and the innovative/creative design-approach.
The business approach stands on defining the company’s strategy consisting of the target markets and customer segments, the technologies used to produce a service, the ecosystem needed to provide a service and the earnings logic to keep the business up and running. This approach relies on hard facts and figures based on what is already known and an estimation of where the world is going.
…. and digging for desires…
When it comes to making business decisions, the design approach adds a softer side to the equation. The design perspective takes into consideration the emotions and needs of potential users. Rather than using objective data, knowledge is created from user insight and subjective opinions from user research. Where the business approach is focused on market segments and economic logic, the design approach is more focused on real people and their behavior.
….leads to creating new
Business design empowers the creation of services that reflect user needs but are also feasible from a business perspective. The purpose is to enrich a company’s strategy by bringing the customer’s voice and empathy into business decisions. It is used for creating business ideas that have an identified group of potential customers and verified demand.
Business design can be used to solve several challenges, such as modeling and developing internal processes, identifying areas for development in the current business, identifying new business opportunities or defining business models for new services.
Whether your need is to renew your current business or create something completely novel, adding the design approach to your process pays off.
A business model is known as a plan of how to execute an organization’s strategy. It can also be a summary of an organization’s business logic. Understanding the target domain is often required in order to model a business, for example, to gain a common understanding where the participants are a cross-functional team. To model these plans or summaries there are many tools, templates or frameworks available. In many cases, they use graphics to create a more understandable way to ensure that different perspectives are considered.
One of these templates which is easy to access is called the Business Model Canvas (BMC). An objective of the BMC is to create a commonly known way to clearly picture the ontology around the target domain. The BMC offers you pre-defined building blocks to divide your business domain or a single product/service – it works in a very scalable way because it fits both small and larger target domains. The BMC consists of nine building blocks which contain points of view from a value proposition, customer thinking, business infrastructure and economics.
The Value proposition building block is in the middle of the canvas. The value proposition defines the value or benefits customers get from using the organization’s products or services. For example, the service’s value proposition is to provide a faster and reliable connection between users.
The Customer segments building block defines the customer groups for whom value will be produced. Customer segments can be sorted with different criteria, for example, according to age, county or industry.
Customer relationships answers questions such as: what kind of relationships the organization has with different customer segments and how are they maintained. For example, how to create relationships with new customers, how to maintain existing customer-relationship or how to develop relationships with potential customers in the future.
The Channels building block represents all the defined ways to reach customers or how the value propositions are distributed for customers. For example, an item bought from an online shop will be delivered via the post office, but a local store can sell the item locally.
The Key resources building block defines all the resources required to produce and provide a value proposition. Resources can be divided for example according to the material (human, IT-infrastructure) and immaterial (patents, brand) resources.
The Key activities building block answers the question: what are the main tasks or functions to deliver the value proposition. For example, activities can be divided according to manufacturing lines, services, or problems to be solved.
The Key partners building block defines the most important stakeholders to complete all the necessary key activities.
The Revenue streams building block defines the price for the value proposition. Different types of prices can be defined according to the customer segment.
The Cost structure defines all the costs of the activities to produce and achieve the value proposition. For example, these can be costs of marketing, distributing and manufacturing. Cost structures can be sorted with fixed and variable costs.
One developed version of the BMC is called Service Logic Business Model Canvas, that especially points out customer thinking in these building blocks. For example, the value proposition considers what are the problems that customers are about to solve with a product or a service. Or what are the specific features that specific customer segments are looking for from the value proposition.
Towards a common understanding
Designing with graphical tools helps to understand the target domain from a different starting point. For instance, project members from different sectors might see the result in a very different way. The BMC-template offers a fast and effective way to begin brainstorming and especially to collect and compare ideas. All you need is a printed BMC-template and lots of Post-it notes. Collecting something concrete on a wall makes it possible to begin discussions with each other and promote the business model to the next level.
Finally, a couple of tips for effective teamwork with the BMC:
- By using different sizes and different colours of post-it notes you can highlight or easily split ideas into groups
- You may use multiple notes to write down words or paint pictures: tell a story while placing them onto the canvas (good stories are remembered for a long time)
- Be open-minded while having conversations about ideas – it’s dangerous to fall in love with your own ideas.
- It might be necessary to go through multiple rounds before getting a satisfying solution. It’s important to evaluate iteratively which ideas work better and which ones do not.
- It might be a good idea to split a larger group of participants into smaller groups and compare their outputs – finally collect the best ideas together.
Example of using Service Logic Business Model Canvas:
Business Model Generation: A Handbook For Visionaries, Game Changers, And Challengers (2010) http://businessmodelgeneration.com/book?_ga=1.248258951.1869965398.1467892617
Osterwalder, Alexander et al. “The business model ontology: A proposition in a design science approach.” (2004). http://www.hec.unil.ch/aosterwa/PhD/Osterwalder_PhD_BM_Ontology.pdf
What is Business design? How should customer needs be taken into account in strategic decision making? This brand new Gofore’s Business design booklet gives you answers to these questions.
This booklet provides an introduction to the topic of business design. The purpose is to define what business design means in practice and to give examples of challenges solved within business design projects.
– The key in business design is to involve both company experts and customers to identify new business opportunities, Senior Business Designer Hanna-Riikka Sundberg, booklet author.
Co-operation between these parties guarantees that the identified business opportunities respond to both the customers’ needs and the company’s strategic goals.
Our goal at Gofore is to work with clients to define their specific business design and look at how they can develop their business in a more customer-oriented way. The contents of this booklet are based on the knowledge gained from several business design projects and discussions with colleagues and peers on the topic. It is also written to inspire readers to think about customer and user experience in a new light when designing services and making strategic decisions.
The Business design booklet is written for anyone interested in getting an initial glimpse into the topic, professionals working among business design related issues, and for those who believe that business design is the answer to finding new opportunities in increasingly competitive markets.
More info about Gofore’s Business design services:
Soile Roth, tel. + 358 400 782 737, email@example.com