Business Model Innovation by Design ?· Innovation by Design Thinking: DENIS DENNEHY Business Model Innovation DIETER DE SMET

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  • Innovation by Design Thinking:

    DENIS DENNEHY

    Business Model Innovation

    DIETER DE SMET

  • Any designers present?

    Individuals whose personality includes

    1. Empathy imagine the world from multiple perspectives those of colleagues, clients, end-users, and

    customers (current and prospective).

    2. Integrative Thinking do not rely only on analytical processes (those that produce either/or choices)

    3. Optimism no matter how challenging the constraints of a given problem

    4. Experimentalism pose questions and explore constraints in creative ways that proceed in entirely new directions

    5. Collaboration design thinker does not simply work alongside other disciplines; many of them have

    significant experience in more than one. (Brown,2008)

  • What is Management?

    equated managing with decision-making and argued that there are three essential aspects of decision-making: intelligence,

    design and action Herbert Simon (The Sciences of the Artificial)

  • Knowledge Funnel

    (source: Martin, 2009)

  • Characteristics of Knowledge Exploration and Exploitation

    Exploration Exploitation

    Organisational focus The invention of business The administration of business

    Overriding goal Dynamically moving from the

    current knowledge stage to the

    next

    Systematically honing and

    refining within the current

    knowledge stage

    Driving forces Intuition, feeling, hypothesis about

    the future, originality

    Analysis, reasoning, data from

    the past, mastery

    Future orientation Long-term Short-term

    Progress Uneven, scattered, characterised

    by false starts and significant leaps

    forward

    Accomplishment by measured,

    careful incremental steps

    Risk and reward High risk, uncertain but potentially

    high reward

    Minimal risk, predictable but

    smaller rewards

    Challenge Failure to consolidate and exploit

    returns

    Exhaustion and obsolescence

    (source: Brown, 2009)

  • Reliability & Validity

    (source: Brown, 2009)

  • What is Design Thinking?

    a process for developing numerous practical alternate solutions to specific problems or issues fully using the individual and group capabilities

    and ideas of employees, customers, vendors, and the general public

    (Oster, 2008)

  • Why Design Thinking?

    New approach to dealing with complex (wicked) challenges in business business management strategy

    development

    sustaining a unique competitive advantage (Clarke and Smith, 2008; Dorst, 2011; Fraser, 2006; Raney and Jacoby, 2010)

    Can make an influential difference in human-centred activities communication and collaboration

    business model innovation (Brown, 2008; Fraser, 2006)

    Assumes the human experience is always messy (Liedtka and Ogilvie, 2011)

  • Solving Tame & Wicked Problems

    Well-defined Traditional linear process of

    problem-solving methods understand the problem

    which can include data gathering and analysis,

    then formulate and implement a solution

    (Conklin and Weill ,2007)

    Multiple stakeholders - many decision-makers with conflicting values

    Dependence on human cognitive abilities (creativity) & social abilities (teamwork) (Hevner et al., 2004)

  • Big Picture Time

    A problem cannot be solved by people who are concerned with only one or

    another of its parts Japanese philosopher Fukuoka

  • Benefits of Visualisation

    Improves problem solving

    Balances participation and reduces the dominance of certain participants

    Facilitates the decision-making process

    Ideally suited for communication

    Provides a visual means to assure mutual understanding

    Creates involvement of participants

  • Evidence of Benefits Promoted

    Visibility

    Provided a

    Common

    Platform

    Promoted

    Interaction

    Encouraged a

    Shared

    Commitment

    Promoted

    Discussion

    Encouraged

    Problem-Solving

    Created a Shared

    Understanding

    Better

    visualisation of

    roles and

    responsibilities

    to be shared

    with new

    partners joining

    the ecosystem

    Common

    language and

    focus good for

    all

    stakeholders

    understanding

    of the process

    A vehicle for

    brainstorming

    Main one was

    team-building

    Everyone had a

    voice

    Helped to

    identify

    customer value

    proposition

    and to focus all

    stakeholders

    on issues

    Identification

    of gaps and

    could be used to

    exclude some

    stakeholders?

    Ability to see

    each partners

    contributions

    and

    motivations

    Ability to listen

    to others,

    ability to

    contribute

    objectively,

    people's ability

    to negotiate

    Good

    interactions

    amongst

    partners

    Collaboration

    amongst team

    was better

    Good discussion

    tool and looking

    at specifics of

    problem

    Discussion,

    clarification,

    communication

    The visual

    ability to be

    able to work as

    a team

    collaborating,

    challenging

    each others

    skills

    Able to agree

    more and very

    good grounding

    on the project

    for all partners

  • Business Model Canvas

    What are we talking about?

  • Retail Bank (Innofin 2014)

    Key Partnerships Key Activities Value Propositions

    Key Resources

    Cost Structure Revenue Streams

    Customer Relationships

    Channels

    Customer Segments

    IT

    Operations

    IT

    Operations

    Deposit Products

    (Lower interest

    rates)

    Deposit Products

    (Lower interest

    rates)

    Interest income Interest income Fee income Fee income

    Retail/

    corporate

    customers

    (depositors)

    Retail/

    corporate

    customers

    (depositors)

    Loan

    Assets

    Loan

    Assets

    Call Centre

    Operations

    Call Centre

    Operations

    Automation

    (where

    possible)

    Automation

    (where

    possible)

    Retail/

    corporate

    customers

    (borrowers)

    Retail/

    corporate

    customers

    (borrowers)

    Channel costs Channel costs

    Physical & IT

    infrastructure

    Physical & IT

    infrastructure

    Investment

    Partners

    Investment

    Partners

    Technology

    Vendors

    Technology

    Vendors

    Regulators Regulators

    Branches Branches ATMs ATMs

    Call

    centres

    Call

    centres

    Interest

    expenses

    Interest

    expenses

    Branch

    Operations

    Branch

    Operations

    Loan Products

    (Higher Interest

    Rates

    Loan Products

    (Higher Interest

    Rates

    Personnal

    Assistance

    Personnal

    Assistance

    Internet &

    Mobile

    devices

    Internet &

    Mobile

    devices

  • Visa Business Model (Innofin 2014)

    Key Partnerships Key Activities Value Propositions

    Key Resources

    Cost Structure Revenue Streams

    Customer Relationships

    Channels

    Customer Segments

    Technology

    alliances

    Technology

    alliances

    Sponsorships

    (Fifa Worldcup/

    Olympics)

    Sponsorships

    (Fifa Worldcup/

    Olympics)

    Network, EDP &

    communications

    Network, EDP &

    communications

    Improved

    sales &

    consumer

    experience

    Improved

    sales &

    consumer

    experience

    Personnel Personnel

    Convenience Convenience

    International

    revenues

    International

    revenues

    Visa brand Visa brand

    Security Security

    Commercial

    partners

    Commercial

    partners

    Payments

    network

    management

    Payments

    network

    management

    Rewards

    associated

    with card

    payments

    Rewards

    associated

    with card

    payments

    Transaction

    processing

    Transaction

    processing

    Payment

    product card

    programs

    & cashless

    payments

    Payment

    product card

    programs

    & cashless

    payments

    Financial

    Institutions

    (issuers)

    Financial

    Institutions

    (issuers)

    Financial

    Institutions

    (Acquirers)

    Financial

    Institutions

    (Acquirers)

    Payments

    product

    platform

    Payments

    product

    platform

    TV

    advertising

    TV

    advertising

    Trade

    Shows

    Trade

    Shows

    Litigations

    Provision

    Litigations

    Provision

    Value-added

    services

    Value-added

    services

    Cardholders Cardholders

    Merchants Merchants

    Service

    revenues

    Service

    revenues

    Data

    processing

    services

    Data

    processing

    services

    Brand

    Promotion

    Brand

    Promotion

  • Google Business Model

    Key Partnerships Key Activities Value Propositions

    Key Resources

    Cost Structure Revenue Streams

    Customer Relationships

    Channels

    Customer Segments

    Intellectual

    Property

    (IP)

    Intellectual

    Property

    (IP)

    Distribution

    Partners

    Distribution

    Partners

    Manage IT

    infrastructure

    Manage IT

    infrastructure

    Global

    sales and

    support

    teams

    Global

    sales and

    support

    teams

    Targeted

    Advertising

    using

    Adsense

    Targeted

    Advertising

    using

    Adsense

    Data

    Centres

    Data

    Centres

    General And

    Administrative

    Expenses

    General And

    Administrative

    Expenses

    Enterprise Enterprise

    Open Handset

    Alliance

    (80+ technology/

    mobile companies

    Open Handset

    Alliance

    (80+ technology/

    mobile companies

    Advertisers &

    agencies

    Advertisers &

    agencies

    Original

    Equipment

    Manufacturers

    (OEMs)

    Original

    Equipment

    Manufacturers

    (OEMs)

    R &D - Improve

    existing products

    /services

    R &D - Improve

    existing products

    /services

    Dedicated sales for large

    corporate accounts

    Dedicated sales for large

    corporate accounts

    Mobile device

    users

    Mobile device

    users

    Targeted

    Advertising

    using Adwords

    Targeted

    Advertising

    using Adwords

    OS &

    Platforms -

    Android,

    Chrome OS

    OS &

    Platforms -

    Android,

    Chrome OS

    R & D -

    New

    product/service

    development

    R & D -

    New

    product/service

    development

    Hosted

    Google Apps -

    storage,

    shared

    calendars,

    video

    Hosted

    Google Apps -

    storage,

    shared

    calendars,

    video

    Advertising Advertising

    Data centers Data centers

    Free Free

    Branding Branding

    Staff Staff

    Internet users Internet users

    Sales &

    Marketing

    Sales &

    Marketing

    Web search,

    Gmail/

    Google+/

    circles

    Web search,

    Gmail/

    Google+/

    circles

    Automation Automation

    Developers Developers

    Sales to

    enterprise

    Sales to

    enterprise

    R&D R&D

    Traffic

    acquisition

    costs (TAC)

    Traffic

    acquisition

    costs (TAC)

  • Workshop Challenge

    Design an m-payment business model for a retail bank

    OR

    Is there a business model that you want to explore?

  • INNOFIN 2014 INTERACTIVE WORKSHOP

    Key Partnerships

    Value Propositions

    Key Resources

    Cost Structure

    Revenue Streams

    Customer Relationships

    Channels

    Customer Segments

    Key Activities

  • Concluding Thoughts

    Effective collaboration and innovation can provide significant opportunities for any business

    Use of visualisation tools can lead to shared understanding shared commitment of all stakeholders.

    Requires an organisational culture of a positive design attitude