Design Business Model Canvas

Designing your way out of a recession

Carol and I had the good fortune to have worked through the 1987 market crash, the boom and crash and the global financial crisis. I say good fortune because it taught us how to pivot.

This COVID19 crash is going to be far worse. It’s going to take some major rethinking of the Australian design industry. In fact there will be a rethink of businesses globally.

Business as usual is not an option.

It will be interesting to see if the current situation – the focus on caring for our friends, family and community – continues once the crisis ends. Will this lead to a fundamental change in how we want the world around us to behave? There seems no doubt that we will go through a severe economic disruption. Will we want to change our way of working as part of this disruption?

The current economic model’s vs Human Centred Design

A quick overview to understand how we developed the business world we operate in. An economy is a system of making and trading things of value. It is usually divided into goods (physical things) and services (things done by people). It assumes there is medium of exchange, which in the modern world is a system of finance. This makes trade possible.

After the great depression and the second world war the traditional economic model was written in 1947 by a small band of economists (the Mont Pelerin Society). They called it neoliberalism and their method was ingenious; they described each economic actor (The Market, The State, Trade and Society) with a set of powerful trends. They wanted economics to be a discipline on a par with science.

It’s important to understand the Mont Pelerin Society believed self-interest rules all economic decisions.

For the last 50 years we’ve been told to give the market free reign because it’s efficient – it’s the State that’s incompetent. The message is ‘open our borders and not meddle with trade because it’s a win-win’.

Many think that concept has led us into social and ecological disasters – and it’s easy to understand why – the concept that finance is infallible was clearly proven wrong in the global financial crash.

We need a new economic story that’s fit for the 21st century. One that is more accessible and focuses on a better life for all. An economy of shared value.

This is not a call for a revolution – it’s an evolution. There are already many Australian designers using their skill to develop a shared value economy.

A model for the new Australian design industry

The experience of working within the Australian design industry over the past 30 years gives us a unique perspective.

To compare how our experience fits with the idea of a shared value economy we’ve referenced a McKinsey article on the three horizons of growth.

This framework was developed by Bill Sharpe. In his book Three Horizons, Sharpe explores his intuition “that we have within us a far deeper capacity for shared life than we are using, and that we are suffering from an attempt to know our way into the future instead of live our way”.

Might sound a bit airy fairy to begin with but it has some very practical applications to the Australian design industry.

The three horizons

Essentially, the three horizons help us forecast the future. The horizons offer insight into possible alternative futures.

The Y axis is the dominant and prevalent industry trend, and the X axis tracks time. The graphic is not a prediction; it’s an aspiration for the change we want to see happen. It visualises a possible future for the Australian Design Industry. A direction to pivot.

The three horizons

Business as usual

H1 is business as usual, the dominant way of doing things. There are many things wrong with this approach. It’s not fit for the future and the process will cause it’s demise over time. It’s approach focuses on design as a transactional process (Level 1 on the Design Maturity Ladder).

This was addressed by Ken Garland in 1964 with the First Things First manifesto, it was re-published as the First Things First 2000 manifesto in 1999 in the magazine Emigre 51 stating:

We propose a reversal of priorities in favor of more useful, lasting and democratic forms of communication – a mindshift away from product marketing and toward the exploration and production of a new kind of meaning. The scope of debate is shrinking; it must expand. Consumerism is running uncontested; it must be challenged by other perspectives expressed, in part, through the visual languages and resources of design.

Unfortunately, with the massive expansion of design businesses in Australia, this manifesto has not been adopted. Instead, each business scrabbles to make a living.

The reliance on selling transactional design led to many design businesses shrinking as easy-to-use software such as Indesign has given clients the idea that if you have the software you can design. It also led to many clients taking their transactional design inhouse.

Kate Raworth, an economist who champions a more inclusive economy in her Doughnut Economy model, refers to H1 as the degenerative and divisive economy that is pushing humanity out of the donut.

The disruptive economy

The most interesting horizon is H2: disruptive innovation. Disruptions can take many forms. A new technology like the smartphone; a bushfire; a pandemic; floods like we see so often in north eastern Australia, or a social movement like Occupy. Disruptions are likely to throw up innovations, new ways of doing or being as different actors innovate in the dynamic space of change between horizon 1 and 3.

We have seen this happen in Australian design: digital technology changed the way design is delivered. To avoid extinction many design businesses embraced digital technology. While it can add ‘bus-y-ness’, in reality it’s just more transactional design and in many cases it just prolongs the inevitable failure of the business.

A shared value economy

The shared value economy (H3) is the future we want. Portions of that future are present and visible today. We want to see them grow until they become the predominant way of doing things — essentially replacing and improving on H1.

Kate Raworth calls H3 the regenerative and distributive economy. We prefer to call it the shared value economy.

In this horizon there will be elements that you are already doing that are ‘sharing’. For example, the discovery process in a branding project can often be a time when you uncover aspects your client had not considered. You may be using HCD tools such as customer journey mapping or empathy mapping to collaborate with your client and their customers. These deliver insights for the client; a sharing of discovered information through collaboration. this can lead to added value for the client.

How do we develop a sharing economy?

The answer is to replace H1 with H3, integrating the best of H2. Kate Raworth gives an example of how this happens:

Take for example, the disruptive innovation of digital platform technologies, which with a phone in nearly every pocket allow new kinds of real time markets to be built upon distributed digital networks. When such a disruptive technology is paired up with new finance and business models, you’ll most likely get something like Uber, which has become infamous for its divisive use of outsourcing on exploitive contract terms. This is known as H2- innovation because it is innovation that has been captured by the old dominant structures in order to extend the life of the H1 economy. And since the innovation is captured here by H1, its energy is not being channeled into helping the new H3 economy to emerge.

The opposite is pairing a business model and finance to create an app that is owned by the taxi drivers themselves. This is what happened in Austin, Texas and the app is Ride Austin. It’s the same technology but designed and financed to help bring through a new model of enterprise ownership with far more distributed outcomes.”

We can develop a sharing economy by questioning each horizon:

H3 what new approaches are being developed and how can we help grow them?

H1 what is dying and how can we help it to let go and leave well, and

H2 what is being disruptive and how can it be harnessed?

How is this relevant to your design business?

It’s relevant because this is your opportunity to shape your future post COVID19. Begin by asking what business as usual (H1) would look like once the pandemic crisis is over.

Ask what the key characteristics of your business are.

Examine where your business sits on the Design Maturity Ladder.

How are you contributing to the overall success of your clients’ business? Not just economic but also environmental, social and cultural sustainability.

Is there anything valuable about the old model that we would want to retain rather than lose? (For example new business development process) In developing your shared value economy approach define services to develop insights you can share with your client. List specific examples and develop case studies.

Ask yourself how they could be scaled up and spread to other clients or other parts of your design process.

Research competitors and peers who are already working in this way. But be wary of the businesses presenting themselves as designers but using HCD tools (empathy mapping etc) as an end in themselves.

Once your shared economy approach is defined, examine how to make it more innovative (H2).

For example if you find your customers are using digital tools, head the opposite way and use face-to-face collaboration. If your competitors are using personas, develop a research approach that allows you to gather individual responses. Hack the HCD tools to make them work better for your clients and the work you are doing for them.

Establish your reputation as an innovator by writing about design and its approach to helping businesses succeed. Avoid just doing puff pieces.

Take a broader community perspective. If you have a number of discovery projects in play, look at how you can create a social enterprise that allows the projects to upskill younger unemployed designers.

Examine each of these innovations and question how they will add to your H3 shared value economy approach.

It’s already happening

The reason we know this model will work is because there are successful design businesses who already work this way. We know that you can’t develop this approach overnight. It will take planning, introspection and a lot of upskilling. The reality is you have to do something. Business as usual is not an option post COVID19.

If you want to learn more about how the DBC is helping the Australian design community contact Greg Branson.

Greg Branson

Contact Greg Branson if you would like to learn more about the many programs the DBC offers.

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Greg Branson

Greg’s passion is the research and development of methods that improve design management and the role of design in business.

Greg has developed The Design Business School to help owners manage their business better along with showing designers how to get more involved in the studio and develop their career path. Contact Greg.