Strategy

Designing a Business

Even if you are in a seemingly simple business you still have to think about its design. Design helps you create the best ways to present your brand, attract customers and put forward the best product or service. Ensuring quality as a condition of great design, reduces your costs of production, delivery, business risk and creates loyalty.

Design isn’t just for big businesses but many small business owners see it that way. Therein lies the opportunity to separate yourself from the competition by bringing design into the culture of your business. This most importantly is the design of your business model in itself.

What is business design?

Finding what is meaningful to your customers is the most important part of designing a business.

At a base level if you are a plumber its simply fixing the blockage but other things a very meaningful to your customer like being on time, the fact you took your boots of before you went inside, that you made it clear what the payment terms were in advance to the customer could allow for funds to be available etc. it could even be meaningful that your buy your materials from other Australian businesses or that they were made in Australia.

So this means being careful not to frame your world in a certain way, it might be different from your customers context.

Another aspect of design a business is about how you solve problems for your market segment. For example you might see “want to stop a tap leaking”, “can’t take a day of work just to get a quote”, “want to be sure its not going to blow out in cost”. This translates into a plumbers who will quote after hours at a fixed price for the job. What portion of your industry offers that? Could this be an opportunity?

Brainstorm. Get a few people together an see how ideas might work together. Look at what other industries do and how that might translate into your industry. For example our plumber lets us order large items ourselves to keep to budget and he just does the install. Other plumbers we have dealt with wouldn’t let us do that. They expected us to remain very “retail” in our relationship with them instead of respecting us as entrepreneurial in not just tech but property and other areas.

Look at how vertical you can go in your offering. There is a trend to reverse outsourcing. There is also a trend toward a new maker economy where things are made locally (morsels in the jusa but its happening in Australia also). Can you make some of the products or services you have to buy in to for fill on your offering? This can create advantages in margin, quality and being able to quote your product as locally made.

Business Model Design

Diagram your business model so its clear to you but also your employees and potentially investors or a buyer of your business in the future.

Lets look at a simplified example in Saasu:

There is more to this picture but I want to get across the method using a business model map. In reality we get revenues from referral fees, subscription income, other services. Expenses out are many for people, infrastructure, data and operational expenses. Awareness through customers, search engines, partners, marketing activities, content, advertising, public relations and more.

Here’s what it looks like visualised and simplified.

Brand

Of all the people to tell you how important brand is we can point you to Richard Branson. However this might surprise you that he actually doesn’t think its that critical to get right at the start. He’s famous for telling people not to overthink it in the beginning because it can be improved or reinvented later.

Aesthetics

Cheat using tools like Shopify, WordPress, Medium to make you look good

Feedback loops, self reinforcing loops

For example, taking quality photos of your job creates various self reinforcing situations. You can use those for testimonials and marketing material. You are saving money not having to pay someone to take them. If you want to build up your social networks or write an article you now have some photo’s to use for content in those platforms. Images are indexed by search engines basis keywords. If you photos have the right keywords other people might find you just from the photo you took. There are more scenarios but i think you will get the idea.

Coincidental benefits

Sometimes making a good decision is about finding 2, 3 or more payoffs for that one strategic choice. For example Saasu is looking at shifting from a domestic bank based payment gateway to Stripe or Eway. The coincidence here is that we built these connections already for our customers, now we are going to actually use them ourselves, we’ll get to really test the customer experience. We” save the headaches of dealing with our old bank who aren’t very progressive and lastly we’ll get some commission on selling a connection to this product for ourselves, thus further reducing the cost. Multiple wins from one decision.

Minimalism

Designing minimalism into your business model is all about doing less but doing it really well. This creates quality, completeness, great referrals and peace of mind. It also ensures you aren’t spreading yourself to thin and creating diluted weak performance in many areas.

Quality

Quality impacts your brand because it is all about customer contentment and satisfaction. This satisfaction changes over time as the industry you are in changes and as the ways and expectations of how customers interact with you changes. You design quality into your products, services and operations. It isn’t just about each individual in your business doing quality work (while that matters). For example space agencies have very high quality thresholds because the customer satisfaction is very simply defined as survival of people and survival of expensive assets. They use Checklists to achieve quality. I hioghly recomend reading the Checklist Manifesto if you want to understand quality and reliability in business.

Sustainability

Sustainability is about ensure your business survives internally but also helps stakeholders outside your business survive such as the environment, customers, the economy etc. Academically I don’t lock in on specific definition here as sustainability is very open ended and varied because of your personal moral context. I look at it from where moral compass is at. I’m a libertarian so I don’t believe others should define my idea of sustainability by their standards. For me it’s about maintaining customer base, being a positive influence on the economy and the capitalist system, trying to reduce the size of government, giving back to the community by provided great value and charity. Facilitating the environment by absorbing very little resources from it to provide our offering.

Some businesses design in failure so customers have to repeat buy because it creates economic sustainability but I think that actually detracts from your brand, withdraws from your moral bank account and jsut isn’t something to be proud off. I’m old school, I like to buy high quality products at fair prices that will last built buy companies with the right moral grounding.

Automation and AI

Doing and thinking by machines is here and it’s arriving as a tsunami. As an example if I was a builder I have the choice of experimenting with new building techniques or I could stick to the existing paradigm. I could keep riding this current wave as long as possible. However all waves lose their energy. The way to think of technology adoption is to use the delayed gratification prioncipole. You can invest early and get benefits over a long period and suffer the upfront cost or you can do this later at lower cost but probably with less payoff available (less years remaining before that technologies benefits are fully commoditised). Neither is wrong just choices with different lifespans.

Design in some science

Experiments in any business are a powerful way to level up your business. The reality is that if you are experimenting you are probably in a fixed unchanging paradigm. No change is actually decay in all the laws of nature and business that I have seen. So experiments are a way to discover alternate pathways, different production methods, service methods, ways to market etc.

If you have a theory can you test it in some way? Yopu probably can and if ypu can do that cheaply with minimal riosk then the return on the experiment is much higher. Don’t forget it may take many experiments before you learn something that adds value.

There are also tax benefits of research and development activities so contact your advisor to check if might apply. They have the effect of reducing the cost of experimenting and sometimes negating it completely. It’s then a free option to do experiments. You might get a nice upside payoff for not upfront risk.

Theory, test, monitor scale, fail

Designing in effectiveness

You need systems that have you start, grind and complete

Starting is about having the strategy. This list of projects or tasks you need to execute on to achieve your plan or goals.

The grind is about having the tasks listed to acheive these and getting through them with resources be they people, services or otherwise. It’s also aboput having a culture of ritualised action with cadence, day in and day out. High standards are critical here to get the best results day in and day out. Why does this matter? Because day in and day it is essentially the thing that create the magic of compounding efforts.

Most important though is to not sit at perfection station, just get started, improve your design skills as you go.

Photo by Per Loov

Categories: Strategy

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