INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

white paper

Jeffrey Tjendra

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

BUSINESS INNOVATION DESIGN MODEL

This paper assesses the following: 1. The need for businesses to create values by enabling innovation not only using one discipline, but through a combination of multiple disciplines such as design thinking, lean startup, and innovation management. 2. How a multidisciplinary approach enables a flexible, iterative and modular process to create holistic outcome in innovation that drives sustainable business growth.

We start by posting 7 questions that the white paper will answer.

Why businesses need innovation? What are the business challenges in which innovation is the answer? Why existing disciplines are inadequate? What is Business Innovation Design? What is the thinking behind Business Innovation Design? How Business Innovation Design works? What is the impact of Business Innovation Design to businesses? (Case Study)

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

IN A HYPER-COMPETITIVE MARKET, BUSINESSES CAN NO LONGER COMPETE BY USING ONE DISCIPLINE AS A VALUE CREATOR FOR GROWTH. BUSINESSES MUST COMBINE MULTIPLE DISCIPLINES IN DESIGN THINKING, INNOVATION MANAGEMENT, STRATEGIC BRANDING, LEAN STARTUP, AND STRATEGIC FORESIGHT TO ADOPT A HOLISTIC APPROACH IN INNOVATION.

A business organization exists to provide value to customers in exchange for their money. Value comes in the form of products, services and experiences. Businesses that provide similar value offerings compete against each other to maximize their strategic efforts in acquiring new and retaining existing customers. This is the basis that defines competitive strategy where each company strives to gain competitive advantage in order to achieve market domination. This usually results in a downward spiral where value offerings become commodities as companies engaged in price wars and battles of outdoing each other. In the commodity business, the winners are those who provide highest quality of products and services at the lowest price possible, while religiously cutting expenses and increasing efficiency. This is business-as-usual. There can only be one low-cost winner in every industry. The rest of them must survive, grow, and win by gaining competitive advantage through differentiation. To differentiate value offerings means companies need to innovate.
Innovation Explained

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

Business-as-usual in organizations present a series of challenges faced on both short and long terms where innovation is paramount. There are ten identified business challenges in which innovation is the answer. 1. How do we empathize with our customers and profit from it? Turn customer insights into user-centered innovation Businesses have understood that to be profitable, they need to provide value offerings that meet the needs of their customers. Therefore identifying unarticulated or unmet needs, and latent desires of their target customers by learning about them and uncovering behavioral insights. These insights are used to improve or develop new value offerings to satisfy their needs. 2. How do we evaluate which ideas to develop further? Validate ideas through design process Individuals inside organizations typically have ideas generated whether they are conceptualized in-house or through open innovation platform. These ideas need to be validated by target customers before they can be developed further into practical innovation. The method of validating is through iterative prototyping used in design process. 3. How do we commercialize our technology invention? Monetize the interaction between user and technology Businesses that invent new technology can either sell their technology for other business to uncover its usage, or identify usages on themselves and profit from it. Commercializing technology into the market requires research on how users behave and interact with technology. This informs technology

usage by turning technological invention into innovation. How users use technology enables features and experiences to be created through innovation. 4. How do we predict the uncertain future? Anticipate emerging trends and create the future When businesses are not able to foresee and keep up with emerging trends, in many cases, this usually has a negative impact to their bottom line. From technology disruption to changing social values, their ability to sustain competitive advantage declines, if not disrupted. In order to be relevant again, they need to identify emerging trends, develop scenarios, and create innovation from scenarios based on trends. 5. How do we develop solutions to realize our visions and get around tradeoffs? Create innovation roadmap and orchestrate strategy CEOs have a vision that needs to be realized. In some cases, they may need to redefine or change its future direction on what business they are in and which market they should be doing business at. Therefore, converting a vision into reality is achieved by creating innovation roadmap that is designed to scale for growth through iterative strategic planning. 6. How do we deliver our brand promise to customers? Turn brand promise into experiential innovation Brand promises are communicated constantly with the expectation that their promises are delivered. For brands to turn their brand vision and deliver their promises to their customers, experience innovation is required to keep their promises through the implementation of value offerings delivered in a

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

compelling experience. Promises made are re-articulated to ensure promises delivered are communicated. 7. How do we execute our business strategy? Create implementation plan through innovation strategy Every company has a top-down business strategy that needs to be achieved over a period of time. Innovation that performs well in the market is partly due the result of effective strategy, and vice versa innovation strategy executes what business strategy aims to achieve. 8. How do we scale our business for growth? Prototype to identify sustainable business models around value offerings Small and large companies will constantly forced to find new business models due to changing landscapes. This is usually because existing business models are not suitable or scalable for growth proven by metrics. This means companies need to pivot and requires the reinvention of business model that are effective and sustainable. A sustainable business model is scalable and viable for businesses, and desirable by customers. 9. How do we mitigate risks? Diversify and filling gaps in portfolio Every market category has opportunity gaps that can be filled, expand into, or create new categories to boosts revenue. Whether it is through the introduction of low-cost model to different colors or materials, these require the identification of opportunities for innovation and create new value offerings.

10. How do we increase profitability and grow sustainably? Expand existing and enter new markets through innovation For businesses to enter adjacent or different market, they need to provide new products and services for the specific market. This situation calls for the need of discovery of customer insights and growth potential, then an innovation strategy and the creation of innovation. These are the ten challenges that businesses typically face in which innovation is the answer. Regardless at which point of entry challenges are being solved, this will result in changing the status quo of how businesses create and orchestrate values.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

To change the status quo of business as usual and solve the identified business challenges, different disciplines and methods have emerged in the past few decades where each solves business challenges using different approaches, however with different focus on which aspect the business it creates impact.
a) Value Creation through Design Thinking Differentiation can be achieved through value offerings. To differentiate value offerings means companies need to innovate. As Scott Anthony, MD of Innosight puts it; to innovate is to create something different with impact. Thus, Design Thinking is the proven approach to creating innovation. According to a global survey on breakthrough innovation and growth by PwC, 20% of C-level executives believe that design thinking is the strongest approach to drive innovation in their organizations. Design thinking is a creative-problem solving approach with specific tools, methods, and mindset designers are adept in. It is essentially brought in to businesses as an added value. However, what design thinking as a discipline is lacking is the integration of end process towards executing ideas to fruition by connecting with operations, business modeling and business planning. Without clarity of how design thinking is integrated and infused with business and being able to measure its return on investment, equipping innovation as a core capability is a challenge.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

b) Back-end Innovation through Innovation Management Innovation fulfills what design thinking is not poised to achieve integrating creative process into business process. The discipline of innovation management is designed as a gated approach to transition ideas from conception and execution while integrating into business operations. Focusing on back-end innovation, innovation management is an effective discipline that has proven its worth. Where the innovation management process lacks its effectiveness is at front-end innovation where it emulates what design thinking produces very well creative process to generate breakthrough ideas that are user-centric. With an oversimplified ideation process through brainstorming, ideas are generated and compiled in a pipeline. The emphasis of idea generation is not determined by quality, but on quantity. Furthermore, innovation management process does not take into account the role of branding in driving innovation. This is essential for organizations as brands to deliver promise through innovation that have been communicated. Without an understanding and practice of how creative ideas are conceptualized, innovation practitioners from B-schools practicing innovation management typically delivers incremental innovation, while failing to deliver differentiated value offerings through breakthrough and disruptive innovations, as well as ignoring the aspect of branding as an innovation driver.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

c) Making Meaning with the Branding A brand is the human identity of an organization. Like humans, the role of branding is to build relationship built and perceived, and guide decision-making of customers. Competitors will inevitably copy commercialized innovation. To prevent competitors from stealing your market share and compete through pricing, branding is required as a differentiator factor. Companies that have invested in building a brand enjoy higher barrier of entry, increased mindshare leading to attaining more market share. This is because the power of branding lies in the ability for businesses to guide customers in making positive meaning towards their value offerings. As the true potential of branding has been untapped on how it connects to innovation, the owner of branding in business unit has slowly shifted from being owned by marketing into the entire organization. Where branding was simply an added value is now a guiding principles that is necessary as a component of business innovation to guide behavior, and strategic choices in innovation and management and innovation. Most brand agencies are still operating on the status quo with the traditional pattern of thinking and delivery. Brand agencies are typically specialized in designing strategy and artefacts to communicate brand promise, but not in delivering brand promise. Delivering brand promise requires brands to innovate. However, most brands are not able to build a business or create new product/ service innovation driven by brands.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

d) Building New Business with Lean Startup No other disciplines are as adept as the lean startup to create and execute innovation, and build a business by delivering promises. The lean startup approach is through iterating in quick cycles between building the idea, learn through customer validation, and measuring impact and scalability of business model. The fast iterative approach in lean startup has enabled businesses to be established in high quantity and high quality operating at lower costs. The lean startup approach have disrupted larger organizations due to its focus on solving human problems by providing relevant products with high speed to scalability. The focus of lean startup has been building business by solving problems of their target customers. However, there is a pattern with startups that breakthrough innovation typically happens once in the beginning, which led to the creation of startups. Innovations that happen afterwards are mostly incremental innovation to refine existing and add new value. There is a lack of pipeline of innovation within startups that is necessary to accelerate growth. Startups are also operating in the present without planning and anticipating much of what future of the industry they are in.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

10

e) Future-Proofing with Strategic Foresight Businesses that are maintaining profitability and growth seek to self-actualize through dominating new market or securing their future in the existing market. Securing the future means anticipating emerging trends that will impact and shape the industry, and adapt their businesses with trends. The approach of strategic foresight focuses on identifying weak signals that make up future trends and creating multiple future scenarios of how their industries will be contextualized. Anticipating the future is the act of creating the future. The value of strategic foresight is in future-proofing organizations by creating innovation based on future scenarios. These innovations are ready to executed when the time matures. The main hurdle of employing strategic foresight in business is similar to issue faced in design thinking integrating future scenarios into business operations. Envisioning future scenarios naturally innovations to be conceived. What is missing is how future innovation be orchestrated and executed in due time in a method that is integrated in business process.

Consolidated Disciplines It is evident that each discipline mentioned has made prominent for its effectiveness in adding specific value to businesses. Each of them has its place and time of when they should be used. C-level executives and business owners have many choices to choose on how to enable innovation and accelerate growth that is dependent upon the business challenges faced. Therefore, different disciplines need to be consolidated into a multidisciplinary approach that is integrative and modular in the approach, flexible in the process, and holistic in the outcome. Business Innovation Design (BID) is the result of consolidating various disciplines together into a seamless approach.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

11

BUSINESS INNOVATION DESIGN IS A MULTIDISCIPLINARY APPROACH THAT GUIDES ORGANIZATIONS ON WHAT AND HOW TO INNOVATE AND GROW SUSTAINABLY. THIS IS ACHIEVED BY CONSOLIDATING VARIOUS DISCIPLINES THAT ADD VALUES TO BUSINESS INTO A NEW FLEXIBLE APPROACH.

Business Innovation Design is created using 24 blocks of methods that comes from a variety of disciplines including design thinking, innovation management, strategic branding, lean startup, strategic foresight, business model design, and business development. Some disciplines possess similar methods in parts of their process. The overlapping methods are identified, isolated, and reconfigured into its necessity of 24 blocks. Conceived in a holistic model, BID visualizes a wide vision in understanding the business on how values are created and orchestrated. In essence, BID merges creative thinking and business thinking together in a model that drives the methodology of design-led innovation and business growth. Business Innovation Design consists in 3 layers that form a multidisciplinary approach in creating the methodology. 1st layer - Thinking 2nd layer - Method 3rd layer - Tools

5 Layers of Business Innovation Design

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

12

1st Layer - Thinking

The compilation of 24 blocks from various disciplines are arranged to design the flow of innovation as a process towards its integration to business process. The blocks are color-coded in transition to categorize their domains of sub-discipline. Each block exists to serve different roles and purposes complementary to other blocks.

Business Innovation Design Model

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

13

The nature of Business Innovation Design is conceptualized in a holistic approach by combining various disciplines including design thinking, innovation management, lean startups, brand management, strategic foresight, business model design, and business development. By taking the best of each disciplines, the modular blocks enables a iterative and flexible yet synchronized transition of processes. The way of thinking shapes the methods and tools on how to approach business innovation by design.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

14

2nd Layer - Method

Business Innovation Design is a flexible and iterative approach that depends on a process called block sequencing. The 24 blocks are designed to be modular to allow them to be arranged and rearranged in sequences. Each block consists of tools to accomplish what the block focuses to achieve. Depending on the practitioner, the blocks can be sequenced in different order to create the outcome intended in each of the three phases in BID. The same block can be re-sequenced. Designing business through BID comes in three phases:

Phase 1

Phase 2

Phase 3

UNDERSTAND THE CONTEXT

DESIGN THE VALUE

ORCHESTRATE FOR GROWTH

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

15

PHASE 1 - UNDERSTAND THE CONTEXT

The first phase of BID is to understand the business hindsight, customer insights and trends foresight. Seeking to learn about the business, their performance, and situation, the right business challenges are identified and scoped into a project. Once the groundwork is completed, it informs us to understand about their target customers using both qualitative and quantitative research methods. After understanding the brand relationship between customers and the company, emerging trends are identified to anticipate the future of the industry. The following is an example of block sequencing in Phase 1.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

16

PHASE 2 - DESIGN THE VALUE

The second phase is for value creation. Designing value in the context of innovation includes designing products, services, experiences that makes up the value offerings, as well as developing new visions and future scenarios. Value offerings are designed in an ecosystem. In designing values, iterative approach is practiced to ensure end success through failure as process. Iterative prototyping ensures values designed are desirable, feasible, and viable. The following is an example of block sequencing in Phase 2.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

17

PHASE 3 - ORCHESTRATE FOR GROWTH

The third phase is value orchestration. Values created on the second phase needs to be orchestrated for long-term business growth. Once value ecosystem is designed, the business is designed around the value ecosystem. Business models, brand strategy, processes and value chains are designed. New capabilities and management systems required to implement innovation are defined in a measurable outcome. Blueprints are created along with future roadmaps. Action plans at all business units are devised and executed in synchronization and monitored religiously. The following is an example of block sequencing in Phase 3.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

18

3rd Layer - Tools

Each BID block consists of a variety of tools to achieve the objectives of the block. These tools are an evolving archive where proven and emergent tools are collected, and the invention of new tools. In BID method, there are certain tools that are fixed to achieve the objective of each block and allow the transition to the next block.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

19

Envisioning block seeks to shape the purpose, brand vision, and mission on what and how to achieve it. Looking forward 5 to 10 years, business defines their vision of their ideal future on how it foresees itself serving their customers. Future trends are aligned with brand vision to create an inspiring future state of the business. Method 1. Analyze the effectiveness of current purpose, vision, and mission of your organization. 2. Craft new purpose, vision, and mission linked to business strategy. 3. Align future trends and visualize the future state of your organization. Tools - Envisioning Crafting - Big Idea Visualization

Scenario planning block turns emerging trends into scenarios that depict the future of an industry. Multiple scenarios are created and planned from different perspectives to understand the bigger picture. This enables the companies to anticipate what may happen in the future. Method 1. Explore future scenarios by combining trends. 2. Categorize scenarios in multiple perspectives to enable breadth of foresight. 3. Develop scenario plan blueprint. Tools - Future Scenarios - Scenario Roadmap

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

20

Growth strategy block evaluates and decides the strategic direction on how a business plans to grow using business design strategy. Growth strategies are outlined and selected matched against the brand vision. Method 1. Identify existing strategic goals. 2. Evaluate existing business strategy of your organizations. 3. Define business design strategy for future directions. Tools - BD Strategy Matrix - Strategic Option Evaluation

Metrics block aims to identify the measurements that define success of implemented innovations. The returnon-investment of BID is measured periodically against selected quantitative and qualitative metrics of business innovation. These metrics are the source of big data where quantitative data can be mined and analytics can be evaluated. Method 1. Identify success metrics on implemented innovation. 2. Define methods of measuring, monitoring and collecting data. Tools - Business Innovation Metrics - Balanced Score Card

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

21

Trends block monitors global and local surroundings for weak signals of change that collectively make up into trends. Trends are the future directions that will impact and shift the societal, technological, economical, environmental, and political landscapes. Trends need to be identified early to anticipate the future of how it will affect the industry as a whole. Method 1. Scan weak signals for emerging trends. 2. Evaluate weak signals for its relevance. Tools - Emerging Signals Map - STEEP Timeline

Customer Insights block seeks to understand customers and their situations on a deep and personal level of what, how, why they think, feel, and act the way they are in a context. The relationship between customers, stakeholders, and the brand are explored to identify actionable insights that fuel the creation of innovation. Method 1. Identify stakeholders impacted by value offerings. 2. Identify and select participants from personas for ethnography research. 3. Conduct ethnography research to uncover insights. 4. Analyze data analytics to uncover behavioural insights. Tools - Stakeholders Map - Contextual Inquiry - Observation - Guided Tour - Photo Journal - A Day in Life

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

22

Making sense of qualitative data collected from ethnography research into insights. These insights reveal pain points and aha moments that are conceived as unarticulated or unmet needs, and latent desires of target customers. This enables the understanding of a complete situation of a topic resulting in a discovery of opportunity areas for innovation. Method 1. Transcribe research data into presentable and workable format. 2. Uncover unarticulated and unmet needs, and latent desires. 3. Visualize diagrams to make-sense of the existing context. Tools - Insights Mining - Root Causes - Synthesis Map

Creation block generates ideas and developed into concepts by using creative process that leads to humancentric solutions. Concepts created are designed to meet unarticulated or unmet need, and latent desires of target customers. These concepts are developed in a bigger picture and small details into an ecosystem of products, services, experiences, processes, and business models. Method 1. Define generative question to kickstart idea generation. 2. Combine trends and insights to create ideas. 3. Co-create new and merge ideas into concepts. Tools - How Might We? - What If? - Trend + Insight = Idea - Idea Clustering - Concept Map

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

23

Concepts created are clustered with the same categories and themes. These are evaluated against a set of innovation criteria derived from customer insights, brand vision, and growth strategy. Concepts are prioritized for its realistic implementation timeline inside innovation pipeline. Method 1. Cluster concepts into similar themes. 2. Evaluate concepts against customer insights, brand vision, and business strategy. 3. Prioritize concepts into innovation pipeline. Tools - Theme Clustering - Prioritization Matrix

Prototyping block seeks to experiment with concepts by building them into lo-fidelity and hi-fidelity prototypes. Prototyping validate an assumption created by specific idea by testing them in real-life settings. This is an iterative approach building from failure as a process to succeeding at the end as validated value offerings. Method 1. Identify elements to validate of desirability and feasibility of concepts. 2. Prototype concepts through experimentations. 3. Pilot concepts in real-life scenarios. 4. Capture and synthesize feedback for improvement. Tools - Paper Prototyping - Rapid Prototyping - Hi-Fidelity Prototyping - Desktop Walkthrough - Experience Staging - Pilot Run

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

24

Activities are listed in the system that is required to implement innovation and operate the business. Key business process is mapped out to understand the operational flow. Value chain is analyzed and reshaped to enable new activity system. Method 1. Visualize current business strategy. 2. Evaluate current value chain system. 3. Visualize new business strategy. 4. Define new value chain system. 5. Map business process to understand operational flow. Tools - Business Activity System - Value Chain System - Process Flowchart

Partners block aims to identify capabilities required in partners and to leverage each others strengths in order to benefit from each other. Partnership engagement strategy is charted to maximize the increase in sales, distribution, and marketing, while leveraging brand. Method 1. List possible industries to leverage from partnership. 2. Identify stakeholders for partnership within each of selected industries. 3. Identify values to be exchanged with stakeholders in a partnership. 4. Analyze the potential impact of partnership 5. Prioritize partnership by its feasibility and impact to your organization. Tools - Industry List - Partnership Identifier Chart - Value Exchange Map - Partnership Impact Analysis - Feasibility-Impact Matrix

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

25

Target customers block identifies demographics and psychographics of target customers and categorized them in various representations of personas. New customer segments are explored to identify potential market to serve. ethod M 1. Identify existing target customers. 2. Define market segment of target customers. 3. Segment customer in groups of demographics and psychographic. 4. Evaluate market segment for viability and desirability. 5. Construct customer segment into personas. 6. Evaluate strategic alignment of each segment. Tools - Segmentation Tree - Market Segment List - Segmentation Evaluation Criteria - Persona Archetypes - Segment-Strategy Fit

Products and service concepts are defined and outlined in a roadmap. The roadmap serves to orchestrate timing of which period of time each value concepts are launched to the market as value offerings. Method 1. Orchestrate value offerings in an innovation roadmap. 2. Plan product/service features, versions and launches. Tools - Innovation Roadmap - Product/Service Roadmap

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

26

Value offerings block focuses on evaluating and organizing portfolio of products and services. The desirability and feasibility of existing products and services are evaluated to stay or be removed from the market. Value offerings are reorganized to suitable categorization, while assessing patterns for potential product/service categories. ethod M 1. List all existing and future products and services provided by your organizations. 2. Evaluate value offerings against growth rate and market share. 3. Place value offerings at the most appropriate touchpoints of customers journey. Tools - Offerings Map - Portfolio Matrix - Portfolio Lifecycle Map - Journey-based Offerings Map

Resources block lists all necessary components required to implement innovation. Resource and capability requirements of each value offerings are identified and planned. Method 1. Identify resources and capabilities required to deliver components of value offerings. 2. Develop innovation resources and capability strategy. Tools - POEMS Timeline - Innovation Requirements

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

27

Sales Plan block shapes the sales process for leads generated from Marketing Plan. The process is defined step-by-step from initiation to closure. Sales tools are outlined and inserted as part of the process to aid sales closure. Method 1. Identify short-term and long-term revenue goals. 2. Prepare pricing model, structure, and discount. 3. Define sales distribution channel. 4. Outline sales tools that aids the sales process to closure. 5. Develop sales process integrated in alignment with marketing activities. 6. Plan client acquisition strategies and tactics. Tools - Distribution Channels - Process Flowchart - Sales Toolbox

Marketing plan is designed as a means to meet financial goals projected. Marketing channels and activities are defined to be budgeted, scheduled, and measured. Product launch strategy is created in steps with a marketing campaign to prepare the market launch of value offerings. Method 1. Analyze the situation of existing market and organization. 2. Define marketing channels to promote value offerings. 3. Develop marketing activities under market channels. 4. Establish budget, timeline, and metrics for marketing activities. 5. Plan product launch campaign. Tools - Situational Analysis - Market Channels List - Marketing Activities Map

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

28

Financial plan block focuses on creating and prototyping financial models to generate financial projects for over a period of up to 5 years. The financial model establishes the numeric figures of revenue and margins to aim in achieving. Milestones and key performance indicators of teams and individuals are determined. Method 1. Assess financial performance of your organization. 2. Create financial projection in different scenarios. 3. Select financial model to aim as key performance indicator. Tools - Financial Modelling

Pricing strategy block aims to identify the right price points for each products and services based on the revenue models attached. Pricing models, objectives and test experiments are established. A series of prices are validated with customers to determine its viability and desirability for certain price range. Method 1. Identify pricing models from value offerings based on revenue models assigned. 2. Calculate fixed and variable costs associate with each of value offering. 3. Set pricing objectives. 4. Sample different pricing plans with customers. 5. Determine pricing models, structure, and discounts. Tools - Pricing Model Lists - Pricing Objectives Lists

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

29

Brand strategy block designs the interactions between customers and business by guiding the making of meaning and relationship archetypes. Brand promise is communicated, positioning is mapped against competitive landscape, while defining brand personality, architecture, identity, and touchpoints. ethod M 1. Assess the strength of your brand. 2. Communicate brand promise of your value offerings. 3. Develop brand positioning in the market landscape. 4. Personify brand personality. 5. Define brand architecture. 6. Construct brand identity system. 7. Orchestrate brand touchpoints. Tools - Brand Audit - Positioning Matrix - Brand Personality Tree - Brand Architecture Tree - Brand Touchpoint Map

Cost structure block evaluates existing financial need of the business, as well as the cost breakdown incurred in the operations and value offerings. Direct and indirect costs of value offerings and the business are defined. Method 1. Identify current stage of financial need of your organization. 2. Analyze expenditures of existing business operations. 3. Analyze cost structure of each value offering. 4. Identify expenditures for each new value offering. Tools - Financial Need Pyramid - Cost Structure Analysis

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

30

Operations plan seeks to define the timeline for key milestones in the long-term and action steps to be taken in order to achieve the established business goals in the short-term. Action steps for quick wins are defined to kick-start project with a purpose of building momentum. Project plans are made along with project charter and design brief to produce products and services. ethod M 1. Develop long-term timeline for key operations milestones. 2. Identify immediate steps for quick wins. 3. Define action steps to achieve short-term business goals. 4. Develop project plan for implementation steps. Tools - High-Level Operating Plan - Quick Wins - Project Charter - Design Brief - Work Breakdown Structure

Revenue modeling block seeks to define how a business earns revenue through a variety of revenue models. Revenue models are experimented for their effectiveness to each of value offering. Business model is defined through revenue modeling of the business. Method 1. Identify existing revenue model of the current value offerings. 2. Identify potential revenue models to improved and new value offerings. 3. Experiment revenue models of each offerings to evaluate their viability. Define revenue models to value offerings. Develop new revenue model of your organization. Tools - Revenue Model Lists - Value Exchange Map

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

31

CASE STUDY HOME IMPROVEMENT SOLUTIONS, Singapore

Challenge Home Improvement Solutions (HIS) is a subsidiary of Home-Fix, a Singapore-based DIY retail franchise in South East Asia. HIS has not achieved profitability since its inception 5 years ago. Several management changes have been made and with the newly appointed business development manager at helm, the client seeks to break this pattern by achieving profitability and growth using Business Innovation Design.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

32

Process Working closely together in a five-months engagement, the client went through all three phases that define the methodology of BID. In the first phase of understanding the context, the current state of the business is analyzed to identify the business challenges that are facing. Product-market fit analysis are conducted to evaluate existing value offerings. Customer research is conducted to uncover behavioral insights. Emerging trends are identified to anticipate the future of the industry. These fuels the creation of new products, services, processes, and business models that are prototyped, validated, and implemented in iterations. The creation of new values informs the identification of new capabilities and management system. This shapes the growth strategy by creating new value ecosystem and roadmap for growth. Redefined strategy shapes new marketing, brand, sales, financial, and human resources plan into a series of execution steps and launch plan. The cycle of BID model repeats itself iteratively over a period of time to achieve outward growth spiral.

Outcome By engaging with Business Innovation Design, Home Improvement Solutions has created a new ecosystem of value offerings consisting of 16 new products and services. These value offerings are stage-managed in the innovation pipeline within a 3-year roadmap, armed with level strategies and implementation plan. As a result, HIS is projected to break-even and achieve profitability within one year, while on its pathway to become a S$15 million company in 5 years with 45% annual growth from a S$200k annual losses. Not only quantitative and qualitative breakthroughs are achieved, BID model has an intangible benefit in transforming the client into an innovation champion. This enables him to shape his perspectives in approaching innovation on how to create, orchestrate, and maintain sustainable innovation at HIS through Business Innovation Design.

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

33

About the Author

Jeffrey Tjendra is the creator of Business Innovation Design. As a designer, researcher, strategist, and consultant, Jeffreys passion is in designing disruptive products, services, and experiences. Jeffrey also guides organizations on what and how to innovate and grow. In the recent past, he has worked as an innovation consultant at NBDA Asia, and design strategist at Singapore Polytechnic with clients including CapitaMalls, MediaCorp, Schneider Electric, SickKids Hospital.

Edited by Wilson Lau and Jesslyn Tjendra

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

34

Business Innovation by Design guides organizations to become an innovation leader through business design. We do this by using Business Innovation Design as a multidisciplinary approach that are flexible, integrative and iterative to create a holistic outcome in innovation that drives sustainable growth.

WEBSITE http:/ /businessinnovatiobydesign.com EMAIL growth@businessinnovationbydesign.com TWITTER @BIDmodel

INNOVATION LEADERSHIP THROUGH BUSINESS DESIGN

35