Article
Business by Design
Achieving concrete financial value with business design
The most successful products and services emerge at the intersection of business acumen and a deep understanding of the target audience. This is where business design comes into play. In this article, we'll explore what business design is and how it creates value for companies.
Introduction
Business design is perhaps the most controversial form of design because it focuses primarily on maximizing sales and profit – areas designers often avoid, as it raises questions about how much value this approach truly creates for customers. However, the hard truth is that without a healthy business foundation, companies cannot operate, and customers won't receive their (presumably) beloved products and essential services. John Maeda, Vice President of Design and Artificial Intelligence at Microsoft, made a statement that not every designer agrees with:
“Design has always been about selling things.”
I will not cover the definition of design in this article. In my previous article, Design meets Strategy, I explained the meaning of design as a practice. This piece is solely focused on business design.
What is Business Design?
Business design combines the "soft", intuitive side of design with the "hard", analytical side of business. This unique perspective offers a fresh approach to business activities, introducing new methods and mindsets compared to traditional business practises. While business design shares similarities with strategic design, its scale and scope are often narrower, focusing purely on delivering business impact. In contrast, strategic design initiatives are typically more future-oriented and may encompass the entire company.
Drawing from my own experience as a business designer, I would describe business design as a blend of customer orientation, design thinking, and data-driven decision-making to create value for the company (read the business) and its stakeholders – particularly its customers. Business design is not about designing products or services – that's the role of product design. Instead, it focuses on designing and validating business models, optimizing processes, and discovering and executing strategic initiatives that support the business.
Business design bridges the gap between various departments, such as design, development, production, marketing, and business, to create and deliver user-centric and commercially viable offerings. It goes beyond crafting aesthetically pleasing products or robust business plans. Ultimately, the goal is to achieve market fit, where supply meets demand. As Thomas Watson Jr., the former CEO of IBM, famously said:
“Good design is good business.”
Business Designer's Role
A business designer must have a mindset oriented toward sales, marketing, and branding to thrive, as their initiatives and activities originate from the business side of the company. While these initiatives vary between companies and cases, they always have a financial aspect. A business designer needs to understand business objectives, market fit, and customer preferences. One of the key tasks of a business designer is identifying differentiation and uniqueness to gain a competitive advantage.
Strategic thinking is another critical skill for a business designer – not just thinking strategically but also planning and executing effectively. Service design expertise is essential in this role, as traditional business methods are often examined through a design lens. This perspective brings real value by diversifying the team and challenging traditional business practices with innovative solutions.
A key focus of a business designer is identifying the company's core competencies and determining how to leverage them to benefit both customer experience and business growth. Equally important is recognizing missing capabilities and raising concerns if they are worth investing in. Collaboration with stakeholders is vital, as the business designer is frequently involved in early strategic initiatives as well as daily tactical activities, often coordinating with various stakeholders.
Stakeholder cooperation can become surprisingly complex, even in small companies, as demonstrated by this stakeholder mapping of a startup digital agency.
In the customer lifecycle, the business designer plays a critical role in communication – determining why, what, when, and how to communicate with the customer. Effective communication requires a clear purpose, a relevant theme, appropriate timing, and the right channel. It's often the only link between the customer and the company, evolving into a more mature relationship over time.
In the product lifecycle, the business designer identifies the stages where products currently stand and plans initiatives and activities in collaboration with the team or business unit. These activities may include increasing awareness, optimizing conversion rates to boost sales, improving service adoption, enhancing customer experience to increase engagement, and reducing churn. Ultimately, every aspect of business design ties back to financial performance.
Levels of Business Design
Business design often balances between long-term strategic initiatives and short-term tactical activities to enhance business performance or respond to shifts in market dynamics.
Example visualization of the Spearhead Approach, showing how strategic initiatives drive long-term visionary objectives to build a better business for tomorrow, while tactical activities focus on short-term goals running the existing business today.
Strategic Initiatives
Strategic initiatives in business design typically include portfolio management, go-to-market planning, crafting value propositions, strategy development for offerings and business lines, defining new business concepts and value streams, managing the customer and product lifecycles, defining communication strategies, conducting market research (such as market studies, customer research, and competitive analysis), mapping customer touchpoints and journeys, designing sales interactions, and contributing to marketing strategy. These initiatives often focus on creating value for the company by identifying differentiation and uniqueness to gain a competitive advantage or creating value for customers to improve their experience and satisfaction, reduce churn, and extend tenure.
Defining and designing value propositions is a common task in business design. This work should involve customers – through interviews or surveys – and include competitive analysis to understand customer expectations and what competitors are offering. The company's offering should then match customer preferences and surpass competitor offerings. In my view, value propositions are deeply tied to productization. When crafting value propositions, businesses gain valuable insights into customer demands, which directly inform product development. This is business design at its finest!
Tactical Activities
Strategic initiatives often translate into tactical activities. Daily tasks might involve sales optimization, such as designing sales interactions for both physical and digital environments. This could include scripting sales pitches for brick-and-mortar stores or driving traffic, generating leads, and optimizing conversion rates on e-commerce platforms. I dare to say that content planning and implementation are vital parts of modern business design, aligning with business goals and enhancing customer engagement.
Business design doesn't just optimize customer-facing interfaces but also internal systems used by staff. Particularly in large companies, improving internal tools can lead to significant gains in customer satisfaction and sales performance. Even if a customer doesn't make an immediate purchase, bringing up an offering during customer service or sales interactions raises awareness, which may lead to future sales. This, too, is business design at its finest!
Designing for the Right Audience
It's essential to understand the level at which you're operating and who you're designing for. Are you designing for external or internal users? Are you targeting those who use the service but don't pay for it, or customers who order and pay for the service but don't use it themselves? For example, parents purchasing mobile subscriptions for their children. Designing for buyers is often very different from designing for users.
An illustration of how business levels align with their audience counterparts shaping the focus of design initiatives and activities.
This scenario is common in the B2B world, where the person purchasing enterprise services – for example a CFO – may never use the service, while the real users are customer-facing staff who rely on it daily. Unfortunately, the opinions of these end users are often overlooked.
Business Design as a Process
Based on my experience as a business designer, the business design process typically follows this formula:
- Research (strategic initiative)
- Analyze
- Plan
- Validate
- Implement (the initiative leads to tactical activities)
Visualization of a common business design process – based on the design thinking approach – starting with a strategic initiative and culminating in tactical activities.
The scale of the initiatives can vary depending on the case, but the process remains largely the same. The main difference lies in the timespan – naturally, larger initiatives take longer than smaller ones. Let's go through each step of the process.
1. Research
Research market dynamics, customer preferences, competitive landscapes, company competencies, and gather inspiration from within and beyond the domain at hand.
2. Analyze
Analyze and document discoveries and insights from the research phase. Identify trends, define problems to address, and uncover opportunities to pursue.
3. Plan
Develop a plan to address existing pain points or propose innovations for untapped opportunities. Ensure the plan includes robust business case calculations and aligns with both business objectives and company strategy to secure management support.
4. Validate
Validate the plan with existing customers or potential new audiences to assess its feasibility. Document insights and refine the plan based on feedback from the validation phase.
5. Implement
If validation is successful and decision-makers approve the plan, break it down into actionable steps. Identify the stakeholders required for implementation. For larger companies, a roadmap is often essential to provide decision-makers with clarity on timescales, resources, and stakeholder involvement.
Re-Evaluate
If validation reveals uncertainties or risks, re-evaluate the plan to address potential business risks and better align with customer expectations. It's common to go through the strategy loop multiple times before reaching the implementation phase. In some cases, the initiative might not proceed if it's deemed too risky. This iterative process helps minimize business risks.
A Key Difference in Business Design
One notable distinction between business design and service design lies in the research phase. In business design, research often starts with a clear understanding of the issues or topics the business wants to explore. In contrast, service design encourages approaching the discovery phase with an open mind and without preconceptions. When conducting research as part of business design, it's beneficial to adopt this open-minded approach to deepen customer understanding and generate fresh ideas for future strategic initiatives.
Measuring Business Design
In business design, KPIs are typically tied to financial targets, meaning the focus is primarily on business impact rather than the design itself.
Business Design Metrics
- Growing revenue and optimizing profit margins
- Increasing or maintaining sales by value and units (including upsell and cross-sell opportunities)
- Driving physical and digital traffic while generating leads
- Boosting service adoption, engagement, and retention, while decreasing churn rates
- Increasing customer satisfaction (measured via NPS or CSAT)
- Retaining the existing customer base and acquiring new customers
- Extending customer lifetime, measured as both value and tenure
- Reducing customer support contacts and increasing self-care usage
These metrics highlight how business design focuses on driving measurable business outcomes. By aligning design efforts with financial targets and customer-centric goals, business design ensures its impact is not only creative but also strategic and tangible, contributing directly to a company's growth and sustainability.
Summary
Business design is a fascinating cross-functional discipline that lies at the very heart of business. It's a role that isn't for everyone, as it requires a strong drive to achieve business objectives and financial targets. Business design is perhaps the most distinct proof of how design can create tangible (and financial) value for a company. Ultimately, business design is about maximizing customer satisfaction to increase customer lifetime value and minimizing financial risks to ensure sustainable operations. This unique balance makes it a match made in heaven, even if it's not as obvious as in other design fields.
One of the biggest challenges in business design is balancing strategic, long-term initiatives – sometimes even visionary – with the fast-paced, short-term demands of tactical activities. I'd estimate that about 70 % of the work focuses on running the daily business as smoothly and profitably as possible. To succeed, be prepared to collaborate closely with stakeholders and stay tactical to thrive in this demanding role.
Merging design and business is an exciting area to explore. Although the design industry is currently in turmoil, I strongly believe that every company should have at least one business designer on board. In the near future, I predict business designers will be in high demand. This is the start of exploring the topic – enjoy and stay tuned for more to come! ▪