New Venture Design
For the past several weeks, I have been taking New Venture Planning course as I move closer to completing my MBA at Drexel University's LeBow College of Business. Generally, the course tracks Alex Osterwalder and Steve Blank's approach to business model generation. In short, Osterwalder and Blank argue that generating a new and sustainable business model does not start with some killer idea but, instead, with an investigation and identification of customer needs and translating those needs into responsive product or service business models.
For example, my teammates and I are working on a new business model for trash collection. In our case, we talked to our presumed customers, trash collectors, and discovered that many are employing a dated method of collecting trash that contributes to lower profit margins and unreliable service. Therefore, everything in our model, from our proposed service to value propositions, channels, relationships, partnerships, cost structure and revenues derive from our identified customer need - a new method of collecting trash that reduces operating costs.
At it's core, this is business design grounded in customer research, testing and iteration, which, unsurprisingly, are all elements central to most user experience and new product design processes. There are also parallels between sound business model design and best practices in other areas, like law and physics. For example, anyone who has practiced law will tell you that precisely identifying issues and conducting relevant research for a proposed solution is essential to success. Similarly, physicists identify the most basic needs and work off of those relying on first principles. These are all proven design approaches for solving a problem and Osterwalder and Blank simply translate these principles into successful new venture planning.
Osterwalder and Blank's application of design and problem solving principles to sustainable business generation is no surprise. As I have written about before, UX matters, and will define the success or failure of many new ventures or products in years to come. However, Osterwalder and Blank make the additional contribution of tying customer-based research and design to business cost structure, partnerships and revenue streams - a link, that in a practical real-world setting, is not always the easiest to demonstrate unless the connections are built into the culture of an organization from the start. Therefore, for new ventures, recognizing that every facet of the business should revolve around a good design that satisfies a customer need, not only sounds right but bears on the startup's success and is inspiring for those designers out there striving to demonstrate value for research-based design practices in business.