Evaluating Business Design
01.10.2019
As with any design process, business design creates a multitude of possibilities that you will have to choose between sooner or later. Unfortunately, the iterative selection in the usual design process costs too much time at a certain number of variants. In business design, however, time is always an issue. So at the end of 2018, my colleagues and I developed a reliable list of questions that speeded up the decision-making process and reduced the risk of taking the wrong path. In addition, the questionnaire opens up the possibility of including important social issues directly into the design 🤯New Innovation Sweet Spot
Thanks to IDEO, the well-known perspectives on innovation projects, Desirability, Feasability and Viability, have, thank God, contributed to integrating customer centricity into the development process. However, by now it should go further: At least since the advent of digital communication, we have seen a growing awareness of societal goals, such as environmental protection. Companies that contribute to a better future are being celebrated. Companies that do not will be punished by the B2C market. In order to reduce the risk of ongoing shitstorms and protests, it is therefore in the companies’ interest to consider social goals at their core. Obviously, it is a good thing in itself to stop polluting the planet or creating social injustice, regardless of possible market reactions 💀
So I think we should take this perspective into account when we talk about the Innovation Sweet Spot. This leads to a new category in the questionnaire: Impact.
Evaluation Matrix
In order to precisely and methodically estimate how much potential a business idea has, you should ask yourself the following questions. Depending on how well the criterion is fulfilled, give the question a number between 0 and 100. 100 always is the best possible answer 👍 0 is not so good 😉
❤️ Desirability
How bad do they want it?
This is where you record how well the idea is received by your customers. The more accurately the offer is tailored to the needs of the customer, the better. If there are too many competitors, this reduces the desire for a particular solution. Market adaptation provides information on how quickly a product can spread.
Product Market Fit – Does my product fit to the target group?
Benchmarks – Are there competitors that offer similar values?
Market Adaptation – How long would it take to win the early majority?
🛠 Feasibility
Can we build it?
You have to estimate how complex it is to bring the product to the market. It’s all about time and money, and how difficult it is to move from 0 to MVP and from there to world domination.
Initial Invest – How much money do I need to kickstart the solution?
Time to Market/Realisability – How long will it take to enter the market?
Scalabilty – How well can the solution be scaled? From easy entry to the big goal!
💎 Viability
Will it be profitable?
The size of the target group and the total turnover provide information about dimensions and profitability. If the concept strengthens the brand, it can serve the strategy indirectly, not just financially.
Target Group Size – How many potential customers are out there?
Turnover – How much money can we generate?
Strategic Fit – Does this solution fit to my brand, my general strategy and goals?
🧠 Impact
Does it change something?
Please consider in advance what effects the business idea will have in a later scaling stage and estimate how much innovation potential you have discovered.
Social Contribution – How does my solution contribute to social objectives?
Environmental Contribution – How does my solution affect the environment?
Innovation – How new is this solution?
🙋♀️ One more thing!
Often you have an intuitive opinion about concepts that might not be captured in the questions above. So I ask for one last scale:
Intuition and Preference – How is your gut feeling about this product?
The scales are never equally important. So it is necessary to include a prioritization. You should orientate yourself on your values or the values of the client. Is it about earning money fast? Then the scales Turnover, Time-to-Market and Market Adaptation should be highly rated. If a sustainable business is to be established, the scales Environmental Contribution & Scalability are more important. A three-stage prioritization is recommended: 1x = less important to 3x = very important.
Objectivity
The decision for or against a new business idea is not easy and should be made carefully. A subjective opinion is rarely enough to build an argumentation you can rely on. Rather than answering these questions for yourself, I recommend asking for many opinions from colleagues, friends and above all experts! 👩🔬 It is best to wrap the questionnaire in a workshop conducted individually with each expert. Present a concept or a variant and go through the individual questions each time. To avoid losing energy, not more than 5 minutes per concept! ☝️
Insights
Once the interviews have been completed, the results must be transferred to a spreadsheet application of your choice. By calculating the average of each concept according to the factorisation, an accurate ranking can be obtained. Voilá, the decision has been made ✅
Beyond that the evaluation matrix can supply also deeper arguments: If only a few scales are observed at once, we get matrices with which more specific questions can be answered. Which concept is most suitable as an entry strategy? Which concept could become a cash cow? Which one is coolest?
If you don’t trust the Matrix yet, so did I. In fact, my team initially used the matrix only to eliminate the lower 10 concepts from the ranking. The remaining ones we worked on in parallel, until we reached their limits one after another and were able to thin them out iteratively. That took us a long time. What was exciting though was that we eliminated the concepts pretty much in the order the ranking had predicted. Also the number one, the last-concept-standing, was already predicted. So the evaluation matrix proved to be right and very valuable.
Of course, the matrix doesn’t make the decision for you. But it helps to define and quantify an objective opinion. The difficult decision can easily be argued and is not as difficult anymore.
At the end I’d like to thank my friends and colleagues Simon Baumgärtner, Jonas Knödler and Moritz Heck with whom I worked on the matrix or on whose work I could build. ❤️