steal this: IDEO’s business model visualization tool

June 23rd, 2011 • posts i've written

This is making the rounds today. This is the tool IDEO uses to identify spaces for design interventions in the businesses they’re putting their grey matter to use for. It’s a tool intended to start a conversation, so by design it’s a simplification of reality, but it’s a damn cogent way to map a business model on a single page. It’s the best I’ve seen, absolutely.

Want to know how to use it? Well, here’s a talk by Tom Hulme discussing the tool you can watch, and/or you can peruse this slideshare by Colin Raney which he debuted at this year’s Planningness.

Alright, so here’s where I slap on a pair of hastily glued wings and probably plummet to my death. But I’ve been tinkering with the original design and I thought I’d share my version. Again, I doubt I can add much value to this, especially because the real value of the tool is in the discussion it evokes, and I’ve never actually participated in one of these discussions, so I’m really going out on a limb of ignorance … but that’s never stopped me before.

So here’s my version …

First, I approached this from the perspective of examining your business model with networks in mind. A lot of this is derived from the thinking I’ve been doing for the book, but some thoughts are more formed than others.

Some explanations:

• Costs: here I’ve broken down costs into two camps, stealing from the software engineer Fred Brooks, accidental vs essential. Essential costs (and complexity) are related to the problem directly at hand, so what it costs to produce the value itself. Accidental costs (and complexity) accrue over-time based on how you do business and how you grow your business (problems that competitors might not have inherited). Accidental costs are usually costs that the consumer ultimately won’t pay for. The value of differentiating between the two is that it forces you to look at your business from an objective vantage point in order to identify inefficiencies.
• Single User VS Network Value: it’s important, especially for innovation-based firms, to design their business models to foster ecosystems and spur network-based growth. You can usually unleash innovation just by asking the question, “What value can we deliver to our customers as members of our network?”
• Balancing Pricing VS Scale: I thought it was important to mention scale in the same breath as pricing simply because pricing decisions have dramatic effects on how the business scales.
• Market & Connectedness: if you really want to build a networked-based business, you have to spend some time thinking about how the markets you want to tap are connected and how they are identified and reached, especially in digital environments.
• Adaptation & Growth: I’m not a big fan of long-term central planning (simply because its a turkey-shoot), instead I’m interested in how organizations will structure themselves and their business units to be more adaptive. These organizations should be rapidly taking in information from their internal relationships (from partners and customers) and from outside threats to devise and prototype mutated offerings. Sometimes this means trying out new products and services and sometimes this means partially discontinuing old products and services.

Ultimately, I’m not sure if I’ve added value or just complication to the original tool, I guess using this to drive conversations would help me understand which outcome I’ve accomplished. I’ve probably destroyed the whole this-can-be-done-in-15-minutes value of it, at least. It was a fun exercise for an hour or so, nonetheless.

Thoughts?

Related posts:

1. an existing business model for digital agencies
2. how to be happy in business – venn diagram
3. understanding the system before designing the nudge

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