My thinking on the new business concept development process has changed over time. I now believe that the process has two parts:
- the design process
- the business model development
The two parts are really an integrated whole, but the design process starts with understanding the customer and their need and produces the product or service. The business model is the plan to commercialize the product or service. All of which is a hypothesis until tested in the market.
Design process probably dates back to the Romans, but it became formalized beginning around 2000. The concept of this process, called "design thinking", is perhaps most easily understood by this simple graphic below from the Stanford Design School. A full explanation of these concepts from Stanford is here.
Coincident with the emergence of design thinking as a formal process was the recognition that such an approach could be applied not only to products (physical objects) but also services (e.g. customer service) and customer experiences (e.g. user manuals). In fact I think formalized design thinking emerged in response to the increased scope of applications for design, perhaps motivated by the designers' recognition that their expertise had much wider application.. if they could only find a way to explain it or show its application.
The question I have been pondering is why formalized design thinking emerged when it did, around 2000. At that time the first Internet bubble was quickly approaching. That bubble demonstrated for the first time the wide spread acceptance and traction of the Internet. One of the things that the Internet made possible was a much closer relationship between the customer and the provider of a product or service. As the capabilities of the Internet grew (Twitter, FB, etc.) the potential relationship grew even closer. While historically the relationship was with the physical product, now the relationship was much wider due to the greater availability of information and the ease with which one could communicate a review or critique. These closer relationships demanded that companies have a much more developed understanding of the customer, what might be called empathy. Design was one of the few workable disciplines that incorporated such thinking about empathy..early in their process (Step 1 above). Therefore, design had the toolkit to assist companies to take a comprehensive look at the customer relationship that now included products, services and customer experience. This quote from Nelson Kunkel at Deloitte Consulting makes the point eloquently:
"The ultimate design is simple. It's the pursuit of transparency."
(If you are going to have genuine and comprehensive relationships, transparency is a requirement.)
Design thinking is a useful process in part because it has such wide application. I encourage the reader to better understand design thinking. If you prefer videos to reading, the video below from Cooper Hewitt is short and entertaining.
Note: After first publishing this post I found this article that shows even more explicitly how some people are thinking about the relationship between business model and design thinking, from Design Thinking Network.