Real-Time Business Model Design and Exploration

In my last blogpost I used the expression real-time business model design, which I didn't really explain. What I meant was the manipulation and exploration of different business models in real-time during a business meeting (real-time means that I immediately see the impact of the change of a variable in a dynamically changing systems). An example would be the exploration of what would happen to my company's business model if I added another distribution channel. What cost consequences (savings/expenditure increase) would this new design have? How many more customers could I reach? What capabilities would this require? Which partners would I work with to provide the channel?

Such real-time business model explorations are still the exception during most meetings. However, I'm pretty sure real-time design explorations would boost the outcome of meetings on more strategic content, such as a company's business model. In most cases a set of prepared static (business model) scenarios are discussed. Probably a flip chart gets employed at one point to visualize some ideas. Design veterans might use colored paper, the wall and numerous post-its. In best cases, an eager manager has put in some extra-hours to come up with a spreadsheet that is sophisticated enough to allow real time changes. Then the meeting participants will be able to explore at least the financial side of business model design choices in real-time.

When I saw the video on experimental multi-touch user interfaces that I wrote about in my last blog I immediately saw some applications in real-time business model design and exploration. Of course the HOW is not clear yet, but the potential is there. Multi-touch user interfaces and a well designed software-assisted business model design tool could overcome some of the hurdles business model design and exploration faces in companies today. In my opinion the main issues are:

  • Paper-based methods, such as flip-charts, colored paper and post-its are not flexible enough to capture the links and causal relationships between different business model building blocks. Thus, when a group of managers decides to explore adding a new distribution channel to their business model, they might be able to add a post-it representing the channel to the overall picture, but this will not show the consequences on the rest of the business model design.
  • Spreadsheets on the other hand allow modelling the abovementioned problem of linkages and causal relationships reasonably well, but mostly at the expense of visual understanding. So while spreadsheets, if they are modelled well, allow some exploration, they don't have the visual strength of paper-based methods.
  • Finally, most managers are not really at ease thinking in terms of conceptual models and model manipulation. And using a software-based tool to manipulate a business model would probably overstrain at least 90% of today's managers.

Multi-touch user interfaces could potentially address all three issues. I think its main contribution will be in making the on-screen manipulation of the different elements of a conceptual models more intuitive. This could considerably lower the barrier for managers to use software-based business model design tools.

In fact, Jean-Sébastien Monzani from the University of Lausanne is exploring new ways of visually representing and manipulating business models together with me. I'm sure multi-touch user interfaces could find their way into Jean-Sébastien's work if our collaboration was more extensive and well founded. At the moment, however, we are doing more ad-hoc work and we're only getting somewhere because of Jean-Sébastien's exceptional programming and graphical skills...

(The first picture is from Jeff Han's website on Multi-Touch Interactin Research. The second picture is a representation of Ticketcorner.com's business model which I am currently working on...)