Design thinking (3): Prototyping Business Ideas
In my previous blog, I explained how prototyping and process management are two ways to manage uncertainty in design. In this blog, I elaborate on levels of certainty in prototyping business ideas and integrate the different strands of my argument in one picture.
The basic problem of design is that we want to know something we cannot know: the future. What would be the effect of a design when implemented? We would like to implement each possible design in a different copy of the world, compare the results, and then return to the present to choose the best one. In the absence of parallel universes and time travel, we have to make do with prototypes.
An idea for a new product or service can only be realized in an ecosystem of businesses. Any business needs customers, suppliers, partners, accountants, lawyers, notaries, ITproviders, marketeers, and housing providers. It needs professional meeting places to maintain relations with partners and competitors. It participates in trade shows to learn about the latest developments. Knowledge for innovation needs to be acquired from the professional literature.
Accepting the idea that product innovation is essentially ecosystem innovation, I here present a series of prototyping techniques for ecosystems that is useful for managing design uncertainty. Each next technique can be used to reduce uncertainty with respect to the previous one.
- Narrative visualization of the product idea. This is a compelling story and/or visualization about the innovation, used to get support and feedback from stakeholders. This where Lego, Play-doh and Tom figurines can be useful. Another technique is to do some paper-and-scissor work to create a cover story of your product idea.[i]
- Ecosystem visualization. If there is sufficient certainty about the product idea,it can be elaborated in a value proposition and the value network needed to produce it. The value proposition describes the product, its customers, benefits, and alternatives. A possible visualization is the value proposition canvas. [ii] The value network describes the ecosystem partners that you need to produce the value proposition. A possible visualization is the value network.[iii] [iv]
- Simulation. The product, and therefore its ecosystem, must be viable. This means foremost that each ecosystem member must profit from participating in the ecosystem. The only tool currently available for this is e3value. This lets you represent the value network, quantify needs, expenses, revenues and investments, and simulate different scenarios.[iv] You may also want to analyze ecological sustainability, social responsibility or other values [iii], but profitability is basic. Without profitability, ecosystem members will disappear.
- Proof of Concept. A proof-of-concept prototype is a possibly incomplete implementation intended to show the feasibility of the design in practice. It may be a rough software prototype, a device cobbled together from available hardware, a piece of the user manual, or a usage scenario to be played out.
- Early stage pilot. Nothing beats the real world as source of information. Where a proof of concept is exercised in the lab, a pilot is an initial implementation in a protected part of the real world. Volunteers will use it as initial customers.
- Late-stage pilot. If the early-stage pilot works, the next item on the agenda is scalability. Does it work with 100 users? 10 000 users? Does it work with unwilling users? Users of all ages? Expand the geography of the ecosystem. And are the participants of the ecosystem able to cooperate at the required scale and speed?
- Launch. To launch the product is to secure the commitment of decision-makers and sell it to customers. This is not the end of your uncertainty, and just as in the above prototyping exercises, you must install monitoring and feedback loops to learn from experience with the product.
This list looks very much like a linear process, but it isn’t. Each exercise in the above list leads to more information about the product, which may lead you to decide to go back to an earlier stage, skip fast forward to a later stage, or stop the process altogether. This is a process management decision, discussed in my second blog.
To put all the strands of my argument into perspective, the following figure shows the three dimensions of design that I discussed in my three blogs. The vertical dimension consists of the levels of prototyping that I discussed above. At each level we follow the design cycle — the topic of my first blog. After each test we decide where to go back and iterate, to go forward one or more steps, or to stop — this is process management, the topic of my second blog.
The rectangle in the middle of the table indicates the parts of a business model for an ecosystem. This will be the topic of a future blog.
[i] Patrick van der Pijl, Justin Lokitz, Lisa Kay Solomon. Design a Better Business. Wiley 2016.
[ii] Alex Osterwalder, Yves Pigneur, Greg Bernarda, Alan Smith. Value Proposition Design. Wiley 2014.
[iii] Elke den Ouden. Innovation Design. Springer 2012.
[iv] Jaap Gordijn, Hans Akkermans. Value Webs. The Value Engineers, 2018. https://www.thevalueengineers.nl/product-category/publications/e3value-ref.