STI Business Models and Design Thinking PDF

AS2002 VIABLE BUSINESS MODEL A viable business model is when a product or service is clearly defined. The market is clear, and there are enough users who want the service or the product to enable the business to grow. It is profitable and has a competitive...

AS2002 VIABLE BUSINESS MODEL A viable business model is when a product or service is clearly defined. The market is clear, and there are enough users who want the service or the product to enable the business to grow. It is profitable and has a competitive advantage. Before forming a viable business model, some processes help a creative business achieve its goals in making the business work. DESIGN THINKING The design does not just pertain to the artwork but also pertains to how business, an organization, or a project is being structured toward innovation. When design and innovation are combined, it can offer a way of doing things differently. It offers a different way of framing possibilities, how things are done, and how to tackle problems. HUMAN-CENTERED DESIGN Before getting into the main design thinking process, Human-Centered Design should be understood first to implement design thinking. Human-centered design is getting to know the users and getting to know the users through interviews and existing data. Human-centered design is putting the interest of the users. It is not the question of “How much can I get after I provide this service?” but it is “What will my users or clients can get out of my service?.” Providing an excellent and innovative product or service is the priority, and the profit will follow. DIFFERENT MODELS USED TO IMPLEMENT HUMAN-CENTERED DESIGN IN DESIGN THINKING Personas – It is fictional characters that are used to represent typical users or the general public. It is created from the data collected, like the demographics of the different users. Creating personas will help you to understand your users’ needs, experiences, behaviors, and goals. Creating personas can help you step out of yourself. It can help you recognize that different people have different needs and expectations, and it can also help you identify with the user you are designing for. Personas make the design task at hand less complex, they guide your ideation processes, and they can help you achieve the goal of creating a good user experience for your target user group. (Dam & Siang, 2020) Example: This is a user persona for AirBnB from Sneha Kulkarni. According to her, “This persona represents the major user group of Airbnb, a platform that connects people looking to rent their homes with people who are looking for accommodations. To develop this persona, I 06 Handout 1 *Property of STI Page 1 of 11  AS2002 conducted qualitative research through five interviews and researched sources providing Airbnb users’ data.” Source: https://snehakulkarni.com/persona This is another example of a persona for a Multimedia production company. The persona here represents other companies that need a multimedia production company to do the creative work. Extreme Users – This is quite similar to persona, but this is more focused on a specific target audience. It does not focus on typical or average users. The question here is, “How will you create something wherein the solution will benefit different individuals with different backgrounds?.” Extreme characters are a great method for extending your considerations beyond the typical and conventional user’s needs. It is easy and very common within the design process to focus on a particular target group and user type. Trying to understand their Photo from Racquel Felix of IDEO U specific problems, needs, and motivations. It encourages you to move outside of well-defined problem spaces, and therefore, to access a large spectrum of human emotions and practices. (Tomitsch & Wrigley, n.d.) 06 Handout 1 *Property of STI Page 2 of 11  AS2002 For example, a client asks you to create an interactive board game that will suit all ages, including senior citizens. You have to do more detailed research on young people, and seniors would respond to that kind of board game. You combine your data and create a solution out of it. 1.) Storyboarding – It is used to visually explore how the users will interact with the product or the service. It can also represent a future situation. These can be used to represent a current or future situation. Storyboards for current situations are effective for highlighting issues with current experiences. Storyboards of future or possible situations can evaluate early concepts with other team members or prospective users and communicate concepts to others. (Tomitsch & Wrigley, n.d.) CAN YOU USE PERSONA, EXTREME USERS, AND STORYBOARD IN JUST STARTING A BUSINESS? No. You can also use the three methods when you are doing your project. Example: Suppose you are paid to do an online selling platform for travel. In that case, you have to visualize your target market first by creating a persona to have an overview of your target market; after you research on their demographics then you can create an extreme user to brainstorm how the website can cater to different people with the different background then you create a storyboard to visualize how your future users will interact with the website. 06 Handout 1 *Property of STI Page 3 of 11  AS2002 WHAT IS DESIGN THINKING? “Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” —Tim Brown, CEO of IDEO (“How do people define design thinking?”, n.d.) Design thinking is a way to approach another skillset and another approach because when you add another skill and try a different approach, it creates innovation. Design thinking gives one the ability to look at and explore the world to find a new solution and strengthens observation skills. Design thinking is a process for creative problem-solving. Source: https://venngage.com/templates/infographics/design-thinking-840bab6b-540b-4c07-8c5a-e6a7944bc8e1 06 Handout 1 *Property of STI Page 4 of 11  AS2002 WHY AND WHERE DO WE USE DESIGN THINKING? It can develop and drive changes that lead to growth and make a difference in the market. It is used to help entrepreneurs and organizations to focus on people that they’re creating for or they are servicing. If the focus is on the people, it will lead to better products, better service, and better internal processes. DESIGN THINKING PROCESS 1.) Empathize Research by identifying what the user/client/consumer’s say, think, and feel. An effective approach is through interviews to learn how people respond to the common or similar issue and then create an empathy map to gather all information from the interview. Sample Questions to Ponder: What will motivate or discourage my users? Where did they experience frustration? Why do we need this type of service? 2.) Define After doing the research, gather all the data and observe where the user’s common problems exist. When the needs were identified, that is where the opportunities for innovation can be highlighted. Sample Questions to Ponder: Are there common issues across many different users? How can this be easier for the user? Who is affected by the problem? What are the different ways we can solve the issue? 3.) Ideate This is brainstorming creative ideas that can address the needs of the users. This part is where you explore a possible solution. Activities such as sketching or using post-it notes will help during the ideation process to visualize the ideas. 4.) Prototype Build a realistic representation of the ideas or solutions. Prototyping creates a sample of what the output will look like, what it does, and how it will work. The goal of prototyping is to understand what part of the ideas or the solution that you came up with will work or not. This phase will weigh the impact vs. the feasibility of ideas through feedback in prototypes. 5.) Testing It puts the prototype in front of the users and sees if the solution meets the users’ needs or checking if it solves the problem. Sample Questions to Ponder: 06 Handout 1 *Property of STI Page 5 of 11  AS2002 Does the solution meet the needs of the users? Has this improved how my users/consumer’s response? The solution you will create for your creative business should materialize and touch the users’ lives. It should impact them and find your product/service useful and worth the time and price. CONDUCT A FEASIBILITY STUDY FOR CREATIVE BUSINESS This is not your usual feasibility study in the usual business class. This is a different approach of doing a feasibility study for a creative/multimedia business. A feasibility study is an assessment of a proposed business. It is to know if the business has the potential to grow or succeed. The goal of doing a feasibility study is to understand all aspects of the business concept, the risks, and to know what are the potential problems that might arise. Before you start to write your business plan, it is important that you first identify how, where, and to whom you intend to sell your product or service. You also need to assess your competition and figure out how much money you will need to start your business—and, more importantly, how much it will take to keep it running smoothly until it is well established. (“How to Write a Feasibility Study Step by Step”, 2018) HOW TO CONDUCT A FEASIBILITY STUDY FOR CREATIVE BUSINESS 1.) Business Description. Describes what the business is all about and the products and services that will be offered. Sample Questions to Ponder: What is my service or product all about? How can this solve the problem of my user? 2.) Market. It contains the industry’s description, the target market, the current market, anticipated future market potential, competition, and potential buyers. Sample Questions to Ponder: What is my target market? Why are they my target market? What will be my edge so that this target market can choose my service over others? 3.) Technical Aspect. It provides details on how the service will be delivered. It includes the materials, labor, business location, and technology needed. Sample Questions to Ponder: Will this technology help me make my business outstanding from the rest? 06 Handout 1 *Property of STI Page 6 of 11  AS2002 Do I need to hire this type of specific people to run my business? If I place my office in this area, will it be accessible to the public? Will I be noticed? Is this type of software advance that will make my work stand out? 4.) Financial. The projected start-up capital needed to start the business, the potential capital sources, and the investment return. Sample Questions to Ponder: Is this amount enough to start up my business? Will I need a business loan from the bank? Will I need some people to help me fund my business? 5.) Organization. This includes the organizational structure of the business. It also includes the background of the founders of the business and their skills. 6.) Conclusion. Discuss how do you see the business succeeding with all honesty. HOW CAN I APPLY DESIGN THINKING IN CREATING A FEASIBILITY STUDY? Before you can come up with a business description, you should have a product or service first, and before you come up with a product or service, you need to know where your future users are coming from and the problem/s that they are experiencing. This is where you can empathize. Once the users’ problems have been identified, you can know to define the possible solutions/s that can solve the users’ problems; from there, you will define who is your target market. You can now start to ideate the products or services you can offer to create solutions to the user/s problem. By ideating, you can identify the resources needed to make your solution or proposed product or service to materialize, which can help you calculate the amount you will need to launch your product or service. Once that you already have ideas in mind, and do the ideation then, you can now create the prototype of your product of your service. Then you will allow users to Test your product if it will work or not. CREATE A BUSINESS MODEL APPLYING THE OUTCOME OF THE FEASIBILITY STUDY Building a business is like building a house; it can’t be built without a plan and a foundation. Building a business requires a lot of planning to lay the business’s foundation to be bound for success later on. A business model is the business’s blueprint. It helps entrepreneurs plan and figures out the business concept, the problem to be solved and for him, how to create customer value, how the product or service will get to the customer, how to stay competitive in the market, and the anticipated cost and revenue. DIFFERENCE BETWEEN BUSINESS MODEL, BUSINESS MODEL CANVAS, AND BUSINESS PLAN Business Model is used when laying the framework or the foundation of the proposed business. It is the main idea of the business and an overview of how it will work. 06 Handout 1 *Property of STI Page 7 of 11  AS2002 The Business Plan is more detailed and deep information about how each part of the business will work. It examines and expects closely every part of the business. Business Model Canvas is a visual tool for entrepreneurs to easily define or communicate a business concept; this is used for conceptualization. HOW TO CREATE A BUSINESS MODEL 1.) Identify the Specific Audience. Specify the kind of audience that you are targeting. Narrow your audience to a detailed buyer persona. Get the demographics, the common challenges, and the solution that the business can offer. This is where the empathize process of design thinking can be applied. Example: ▪ Students ▪ Young Professionals ▪ Soon-to-be-wed Couples ▪ Multinational Companies ▪ Toddlers and children 2.) Establish the Business Process. Identify what the activities of the business are. What the business can offer and what is the processes in providing those services or products. Example: ▪ Providing photo and video coverage for events ▪ Digital and Silkscreen Printing Services ▪ Providing digital marketing services for companies ▪ Creating 3D models for interior design and architectural firms ▪ Providing application development and design services 3.) Record Key Business Resources. Indicate the resources needed to run the business and day to day operations. Example: ▪ Adobe Software ▪ The model of the camera ▪ Printer ▪ Animation table ▪ Pen Tablets ▪ Computer ▪ Social Media Marketing Materials 4.) Develop a Strong Value Proposition. This is a matter of how the business will stand out among the competitors in the market. It is establishing your unique selling proposition, which is the highlight of your business that the users will not easily find from anyone else. A successful business is a business that can be relevant in the market even after years had passed. How will your business stand out in the market competition? Can you provide an innovative service? Can you give a twist to old or usual services or products? 06 Handout 1 *Property of STI Page 8 of 11  AS2002 Example: ▪ A web design company that can also create an augmented reality application. ▪ A full-house production company that caters all services from animation down to digital market campaigns. 5.) Determine Key Business Partner. A business will function properly if there will be partners who can contribute to its ability to serve the user. Example: Lazada for online shopping of clients who wants to purchase customized tumbler from a digital printing company. ▪ Taxumo for online tax assistance for your business. ▪ Lito Sy as partner-mentor for a start-up photography company. ▪ Schools who can avail photography and videography service at a discounted rate. ▪ Collaboration with Manila Pride March for advertising campaign materials. 6.) Create Demand Generation Strategy. Create a strategy that will build an interest in the business and be designed to close a sale. How will clients find you? What should they do once they become aware of your product and service? Example: ▪ Social media boosting of FB page and Instagram. ▪ Referral from family, friends, and other members of your influence. ▪ Collaboration with other brands (e.g., collaboration photoshoot with a marketing campaign for an NGO) 7.) Innovate. Always leave room for improvement because understanding that the business will never be perfect can be progressive. Once that the business is running, it needs a constant review to be able to identify what are the opportunities for improvement. BUSINESS MODEL CANVAS The business model canvas is a great tool to help you understand a business model in a straightforward, structured way. Using this canvas will lead to insights about the customers you serve, what value propositions are offered through what channels, and how your company makes money. You can also use the business model canvas to understand your business model or that of a competitor. (“Business model canvas”, n.d.) On the other hand, a business model also describes how the future business intends to make money. Components of the Business Model Canvas Customer Segments - These are the groups of people or companies you are trying to target and sell your product or service to. Segmenting your customers based on similarities such as geographical area, gender, 06 Handout 1 *Property of STI Page 9 of 11  AS2002 age, behaviors, interests, etc. allows you to better serve their needs, specifically by customizing the solution you are providing them. Creating personas is helpful in this part. Customer Relationships - In this section, you need to establish the type of relationship you will have with each of your customer segments or how you will interact with them throughout their journey with your company. Channels - Describes how your company will communicate with and reach out to your customers. Channels are the touchpoints that let your customers connect with your company. Revenue Streams - Revenues streams are the sources from which a company generates money by selling their product or service to the customers. And in this block, you should describe how you will earn revenue from your value propositions. Key Activities - What activities/ tasks need to be completed to fulfill your business purpose? In this section, you should list all the key activities you need to do to make your business model work. These key activities should focus on fulfilling their value proposition, reaching customer segments, maintaining customer relationships, and generating revenue. Key Resources - This is where you list down which key resources or the main inputs you need to carry out your key activities to create your value proposition. Key Partners - Key partners are the external companies or suppliers that will help you carry out your key activities. These partnerships are forged to reduce risks and acquire resources. Cost Structure - Identify all the costs associated with operating your business model. You will need to focus on evaluating the cost of creating and delivering your value propositions, creating revenue streams, and maintaining customer relationships. And this will be easier to do so once you have defined your key resources, activities, and partners. Value Propositions - This is the building block that is at the heart of the business model canvas. And it represents your unique solution (product or service) for a problem faced by a customer segment, or that creates value for the customer segment. A value proposition should be unique or should be different from that of your competitors. If you are offering a new product, it should be innovative and disruptive. And if you are offering a product that already exists in the market, it should stand out with new features and attributes. Source: The Easy Guide to the Business Model Canvas, 2019 06 Handout 1 *Property of STI Page 10 of 11  AS2002 References How do people define design thinking?. Design Thinking.IDEO. Retrieved 1 July 2020, from https://designthinking.ideo.com/faq/how-do-people-define- design-thinking. Giacomin, J. (2014). What is human centred design? The Design Journal, 17(4), 606-623. Retrieved from https://bura.brunel.ac.uk/handle/2438/11408 Leonard, D., & Rayport, J. F. (1997). Spark innovation through empathic design. Harvard Business Review, 75(6), 102-115. Retrieved from https://hbr.org/1997/11/spark-innovation-through-empathic-design Gibbons, S. (2016). Design Thinking 101. Nielsen Norman Group. Retrieved 6 July 2020, from https://www.nngroup.com/articles/design-thinking/. Prototyping. Interaction Design Foundation. Retrieved 6 July 2020, from https://www.interaction-design.org/literature/topics/prototyping. How to Write a Feasibility Study Step by Step. Business Lab Consulting. (2018). Retrieved 6 July 2020, from https://www.businesslab-eg.com/how-to-write- a-feasibility-study-step-by-step/. Business model canvas. Business Models Inc. Retrieved 7 July 2020, from https://www.businessmodelsinc.com/about-bmi/tools/business-model-canvas/. The Easy Guide to the Business Model Canvas. Creately. (2019). Retrieved 7 July 2020, from https://creately.com/blog/diagrams/business-model-canvas- explained/#:~:text=There%20are%20nine%20building%20blocks,key%20activities%2C%20and%20cost%20structure. Altitude. (2017). Design Thinking Video from MIT and Altitude [Video]. Retrieved 7 July 2020, from https://www.youtube.com/wa tch?v=kq2kd3CXi1o. The Strategy Group. (2017). What is Design Thinking? [Video]. Retrieved 7 July 2020, from https://www.youtube.com/watch?v=TtgegZfk5ZU. Dam, R., & Siang, T. (2020). Personas – A Simple Introduction. Interaction Design Foundation. Retrieved 9 July 2020, from https://www.interaction - design.org/literature/article/personas-why-and-how-you-should-use-them. Tomitsch, M., & Wrigley, C. Innovation Through Design: Think, Make, Break, Repeat. Lecture, The University of Sydney. Felix, R., & IDEO U. (2016). Identifying Extremes Users -How might we gather insights and inspiration to design products and services for the modern 70 year old?. Presentation. AJ&Smart. (2020). What Is Design Thinking? An Overview (2020) [Video]. Retrieved 28 September 2020, from https://www.youtube.com/watch?v=gHGN6hs2gZY&list=PLJ2pUXHkKWhDz7dWVWj5dDshk2Lf3RUb-. The Strategy Group. (2017). Design Thinking Case Study.) [Video]. Retrieved 28 September 2020, from https://www.youtube.com/watch?v=rWyClv8bico&t=2s-. 06 Handout 1 *Property of STI Page 11 of 11