A conversation approach to business model innovation more

A CONVERSATION APPROACH TO BUSINESS MODEL INNOVATION ZAANA HOWARD SWINBURNE UNIVERSITY OF TECHNOLOGY ZHOWARD@SWIN.EDU.AU ABSTRACT Sense making through conversation plays a key role in channelling and furthering participatory business model innovation. The designer as facilitator, with conversation as a core tool, is an emerging area of interest within the design research literature. This paper will discuss preliminary findings of a case study of Second Road, a strategy and innovation consultancy that employed a design thinking approach and conversational methods to redesign a client’s business development model. Through this study conversation based co-creation emerged as the primary method for participatory innovation. INTRODUCTION Design thinking is a designation for participatory innovation and human-centred design processes. Brown & Wyatt (2010) position design thinking as an opportunity for organisations to create better outcomes for the people they serve. Similarly, Boland and Collopy (2004, p.xi) discuss design thinking as crucially important for organisational leaders to create a ‘humanly satisfying and sustainable future’. As consumers continue to expect more personalisation and customisation from their service providers, the use of design thinking for business model innovation within organisations is a logical progression. This paper will discuss preliminary findings of a case study of Second Road, a strategy and innovation consultancy based in Sydney Australia, in the context of a client engagement. For Second Road (2011) design thinking is the art of inventing new things and of turning thinking into action, accomplished through conversation based co-creation. Through employing a design thinking approach and conversational methods the client’s business development model was redesigned as a conversational system. Sense making through conversation plays a key role in channelling and furthering participatory business model innovation. DESIGN THINKING PRIMER Design thinking emerged from the design methods movement (Buchanan 1992), a stream of research focused on understanding the thought processes and methods behind design practice. Buchanan (1992) shifted the concept of design thinking to a more intellectual approach of problem framing and solving, which could be applied to anything, tangible object or intangible system (Kimbell 2009). For Buchanan (1992), design problems are complex or ‘wicked’ (as coined by Rittel & Webber 1973). This draws attention to the intangible nature of many design problems and solutions which now embrace far more than just products but designing for ‘people’s purposes’ (Sanders & Stappers 2008, p.11). Whilst design thinking can be applied to all disciplines of design, it is primarily associated with ‘complex systems and environments for living, working, playing and learning’ (Buchanan 1992, p.10). Definitions and descriptions of design thinking vary in depth and character across the literature, however, they hold several commonalities. Design thinking denotes a collaborative and human centred problem solving process (Brown 2008) using a designerly approach to solve wicked problems, extending from management (Dunne & Martin 2006; Golsby-Smith 2007) to products (Brown 2008) through to services (Bell 2008; Duncan & Breslin 2009) and social innovation (Brown & Wyatt 2010). Participation and engagement is at the core of the design thinking approach. These design practices that deal with wicked problems ‘require a different approach in that they need to take longer views and address larger scopes of inquiry’ (Sanders & Stappers 2008, p.11). CONVERSATION IN DESIGN THINKING Design thinking, as a human centred and collaborative process, implies the need for co-design where designers and users (often not trained in design) use their ‘collective creativity’ to work together to design solutions to problems (Sanders & Stappers 2008). Implicit within design thinking are two core activities Participatory Innovation Conference 2012, Melbourne, Australia www.pin-c2012.org/ 1 that occur throughout every stage: design facilitation and conversation. The concept of designers as facilitators, with conversation as a core tool, is an emerging area of interest within the design research literature. For design thinking, language is both a means for communication and a tool (Owen 2007, 25). It is not just a medium for representing the world but also for intervening in it (Argyris et al 1985). Conversation allows navigation through the many languages involved in the design process – verbal, visual, material and others – in order to reach shared understandings toward creating desired outcomes. When using a design thinking approach within organisational environments, conversation is a critical component of the process as design occurs within conversation. In organisations, employees act as the agents of design and as such their social interactions, conversations, roles and relationships are important to consider within the design process (Cross & Clayburn Cross 1995; Schon 1992). For Louridas (1999) conversation is more than a language interaction between people but following Schon (1992), also a reflective conversation with the materials and environment. In this view, design is a discussion conducted with the materials in the medium with which the design works. It is a hermeneutic process, a process of iterative understanding (Louridas 1999). This recognises then that the human ecosystem involved in the design thinking process consists of more than the physical environment – it also includes all the social, cultural and behavioral elements of human interaction, the way people work together and get things done (Jenkins 2008, 19). Conversation occurs then between all of these elements. METHODOLOGY The design thinking practices of Second Road were examined through methods of semi-structured interviews and an audit of the client project. INTERVIEWS Semi-structured interviews were conducted with 12 Second Road employees, comprising a representative sample across all areas of the organisation, including designers and non-designers, and various levels of experience and seniority. Interviews ranged in length from 30 to 60 minutes. To develop an understanding of Second Road design thinking practices, questions focused on experiences of applying design thinking in organisations and the tools and methods used. PROJECT AUDIT A project audit focused on one client project that used a design thinking approach and co-creation methods. Artefacts such as photographs; dialogue maps; activity visualisations, prototypes and the final report were reviewed to develop an understanding of the project. This formed the basis for an in-depth semi-structured group interview conducted with the Second Road project team. Interview questions examined the application of design thinking in practice and the role of conversation in a client project. From this, a rich picture of the application and outcomes of design thinking within a complex organisational setting emerged. ANALYSIS All interviews were transcribed and subject to content analysis through a constant comparative process. The content analysis was conducted systematically and occurred in three stages, each time iteratively synthesising the data until the categories reached sufficient meaning (Tesch 1990). SECOND ROAD CASE STUDY Second Road is a strategy and innovation consultancy in Sydney, Australia. In 2010, a mid-tier engineering company engaged Second Road to redesign the company’s business development model. This fourmonth project used a design thinking approach and a codesign team of three Second Road consultants and six engineering company employees. The team was engaged in participatory conversation based activities toward co-designing the final outcome. The final project outcomes included a new conversation-based client engagement process for business development and tools to support this process in the form of visual models, stories and conversation pathways. Implicitly it also resulted in building design thinking capability amongst the engineering project team members. CONVERSATION IN BUSINESS MODEL INNOVATION Conversation in business model innovation will be discussed through understanding Second Road’s use of conversation as a primary method for participatory innovation supported through two specific examples drawn from the project audit. CONVERSATION AS METHOD Second Road structured the engineering client project using the Design Wave™, which breaks the design thinking process into four overlapping phases each with its own major outcomes. Conversation was the primary method for the project. For interviewees, conversation itself is a creative and generative process that produces clarity and something concrete to manipulate (Interviewee 1, Interviewee 2). As Participant 3 (Group Interview) states ‘conversation becomes…an effective mode of collaborative creation because through the process of language…and speaking together we start to create not just a thing, an outcome but also a shared understanding, a framework’. www.pin-c2012.org/ 2 Participatory Innovation Conference 2012, Melbourne, Australia Phase Problem finding Outcomes Understanding the context. Defining the project scope. Developing the focusing question. Conversational Activities Strategic conversation Developing a focusing question. Determining the funnel of scope. Semi structured stakeholder interviews Three horizons business model development Experience mapping Model and prototype development iterated from commencement of project Experiential prototyping of conversation system The following examples demonstrate conversational activities to draw out and understand the current business model to then identify gaps and requirements for innovation. MAPPING THE BUSINESS DEVELOPMENT EXPERIENCE Mapping the business development experience was an activity that occurred in the Discovery Phase (refer Table 1) of the design thinking process. The purpose of the activity was for the project team, through conversation and visualisation, to understand how business development was currently conducted and how the company interacted with different levels of work (Jacques 1998). To commence, the team developed scenarios based on their experiences of business development, and then used this to map their understanding. Key questions asked were: Who are the main actors? What are the key decisions made? What are the key documents required? What are the key events? The conversation supported by the visualisation activity allowed the team to discuss in depth their experiences of business development through understanding the key relationships at different organisational hierarchical levels, the decision makers within organisations, the process of documentation and the marking of milestone events. This also revealed where the current process broke down to highlight specific redesign needs. Discovery Stakeholder researcher using qualitative methods of interviews, observation and activities. Data synthesis. Invention Consolidation of hypotheses, models and solutions developed in the first two phases. Testing and refining models and solutions. Refining the prototype. Developing the implementation plan. Implemen -tation and testing Table 1: Design Wave™ project phases, outcomes and indicative conversational activities. The data revealed that for conversations to enable participatory innovation, they need to be designed through activities (see Table 1) and considered questions, in order to create the right environment to draw out the required information or story (Interviewee 5). Participant 4 (Group Interview) emphasises this concept that conversation can be designed, stating it ‘isn't just a natural organic rambling…designing a conversation is about knowing…who are the right people to have in the room, what is the right time to have the conversation where is the right setting to have the conversation in, what's the right topic to be discussed, how is the best way to do it…to take those things into account conscientiously is probably a big step towards designing good conversations’. Conversations were supported with visualisation and the use of heuristics. Visualisation and heuristics represented the designerly aspects of design thinking, and conversation the language aspect to enable the collaborative and participatory innovation process. From the interviews it emerged that this combination of design and conversation are enmeshed, where conversation underpins the design process (Interviewee 5). It is conversation that turns design into a social design process of co-creation (Interviewee 6, Interviewee 8). Figure 1: Business development experience mapping canvas USING THE THREE HORIZONS FOR BUSINESS DEVELOPMENT The purpose of the three horizons for business development activity (Figure 2) (adapted from Baghai, Coley and White 2000) was to assist in explicitly defining the audience the engineering company wanted to capture through discovering the ideal clients and areas of work they wanted to engage. It first involved having a conversation in regard to defining the horizon criteria: What are the criteria for the ideal client? What are the criteria for the type of service the company would like to provide? After developing the criteria, the conversation was then Participatory Innovation Conference 2012, Melbourne, Australia www.pin-c2012.org/ 3 visualised through populating the matrix with organisations and the various types of work based on these measures. This was scaled from 1-4 – 1: definite yes, we have direct experience; 2 – analogous experience; 3 – not likely; 4 – never. The result was the identification of the first key audience for the company to begin targeting – those positioned in the 1-1 box in the matrix. • to become the shared conversation of the team rather than individual views • to act as a prototype for iteration and evolution • to tell the story of the present situation. At the end of each conversation or conversation-based activity, a summary story would be repeated back for clarification, feedback and closure. Golsby-Smith (2007) emphasises the need for skilful facilitation of conversation within design thinking, where the facilitator is trained in the art of design rather than group dynamics. As Golsby-Smith (2007 p.29) states: ‘They [the design facilitator] bring the design skills and methodology; the group brings the design problem and design instincts’. The purpose for this is being able to guide a social co-creation rather than private design process. This paper contributes to the design thinking research through its focus on conversation emerging as the basis for co-creation and the requirement for skillful facilitation within design thinking projects to enable successful outcomes. In this case it was through this participatory conversational process of sharing, learning, iterating and transforming that innovation was achieved, resulting in a redesigned business development model. This impacts on the demands and capabilities required of the designer to be amongst other things conversation designers and skillful facilitators to enable successful outcomes in a design thinking project. As this represents preliminary findings of one case however, the research has significant limitations. Further research is required to determine if conversation based co-creation is generalisable to other contexts and design problems and to further understand the role of the designer as facilitator. Figure 2: Three horizons business development canvas (adapted from Baghai, Coley & White, 2000) The activity created a safe construct for discussions of conflicting values and ‘crossing intentions’ (Burr & Larsen 2010, p.136) to occur. It enabled a rich conversation focused on co-creating shared understanding and explicit knowledge of what the company values and the services it wants to provide, what it can do, is willing to do and also what it will never do. The conversation, visualised on the canvas, became the shared story of the team telling the current situation and future aspirations. DISCUSSION Emerging from this Second Road case study of business development model innovation is the notion of conversation based co-creation as the primary method for design thinking. Designed activities provide the conversational focus and structure, and visualisation provides the documentation and prototyping to enable shared meaning and iteration of ideas. While this case study emphasises conversation as the primary method for design thinking, this goes hand in hand with requiring skillful facilitation. The designer as facilitator guides the design thinking process while also creating a safe environment for people to participate. Conversations were facilitated ‘within the circle of participation’ (Burr & Larsen 2010, p.136) by Second Road throughout the project. Conversations were captured through dialogue mapping on a whiteboard or through visualisation as in the experience mapping and three horizons business development examples discussed. The act of documenting the conversation served several purposes: • to make explicit the conversation acting as visualised artefact REFERENCES Argyris, C, Putnam, R & McLain Smith, D 1985, Action science: concepts, methods, and skills for research and intervention, Jossey-Bass, San Francisco. Baghai, M, Coley, S & White, D 2000, The alchemy of growth: Practical insights for building the enduring enterprise, Perseus Publishing, San Francisco. Bell, SJ 2008, Design Thinking. American Libraries, January/ February, pp. 45-49. Boland, RJ Jnr & Collopy, F 2004, ‘Design matters for management’, in RJ Boland Jnr and F Collopy (eds), Managing as designing, Stanford Business books, Stanford, CA, pp. 3-18. Brown, T 2008, Design thinking, Harvard Business Review, 86(6), pp. 84-92, 141. Brown, T & Wyatt, J 2010, Design thinking for social innovation, Stanford Social Innovation Review, Winter, pp. 30-35. 4 Participatory Innovation Conference 2012, Melbourne, Australia www.pin-c2012.org/ Buchanan, R 1992, Wicked problems in design thinking, Design Issues, vol. 8, iss. 2, pp. 5-21. Burr, J & Larsen, H 2010, The quality of conversations in participatory innovation. CoDesign, vol. 6, iss. 3, pp. 121-138. Cross, N & Clayburn Cross, A 1995, Observations of teamwork and social processes in design, Design Studies, vol. 16, iss. 2, pp. 143-170. Duncan, AK,& Breslin, MA 2009, Innovating health care delivery: the design of health services, Journal of Business Strategy, vol. 30, iss. 2/3, pp. 13-20. Dunne, D & Martin, R 2006, Design thinking and how it will change management education: An interview and discussion. Management Learning, vol. 5, iss. 4, pp. 512-523. Golsby-Smith, T 2007, The second road of thought: how design offers strategy a new toolkit. Journal of Business Strategy, vol. 28, iss. 4, pp. 22-29. Jacques, E 1998, Requisite organization. a total system for effective management leadership for the 21st century, 2nd rev. ed, Cason Hall, Arlington, Va. Jenkins, J 2008, Creating the right environment for design, Design Management Review, vol. 19, iss. 3, pp. 16-22. Kimbell, L 2009, Beyond design thinking : Design-aspractice and designs-in- practice, Centre for Research on Socio-Cultural Change (CRESC) Annual Conference, University of Manchester, Manchester. Louridas, P 1999, Design as bricolage: anthropology meets design thinking, Design Studies, vol. 20, iss. 6, pp. 517-535. Owen, C 2007, Design thinking: Notes on its nature and use. Design Research Quarterly, vol. 2, iss. 1, pp. 1627. Rittel, HW & Webber, MM 1973, Dilemmas in a general theory of planning. Policy Sciences, vol. 4, iss. 2, pp. 155-169. Sanders, E & Stappers, PJ 2008, Co-creation and the new landscapes of design. CoDesign, vol. 4, iss. 1, pp. 5-18. Schon, DA 1992, Designing as reflective conversation with the materials of a design situation. Knowledge Based Systems, vol. 5, iss. 1, pp. 3-14. About us, 2011, Second Road, viewed 12 February 2011, <http://secondroad.com.au/Dynamicpages.asp?cid=2&n avid=2>. Tesch, R 1990, Qualitative research: Analysis types and software tools, Falmer, Bristol, PA. Participatory Innovation Conference 2012, Melbourne, Australia www.pin-c2012.org/ 5