Business Design

This course is currently being redeveloped. It started as a course in startup consulting… In all of my courses I aim at designing transformative learning experiences that help learners develop beyond what is possible in their comfort zone. See this article for more on personal transformation.

This course offers a project-based learning experience centered on Business Design projects.

Business Design, sometimes referred to as new Business Building, is the iterative, human-centered process of learning

1) how to create value (new product, service or experience development) for a customer whose needs are well understood through observation and analysis,
2) how to claim value (revenue model & price, costs), and
3) how to deliver value (channels and partners)

with the aim of validating the business model and then preparing to scale the business.

One key to distinguishing between Business Design and Innovation is recognizing that Innovation tends to be focused on new product or service development, while Business Design is ultimately concerned with validating the optimal Business Model that supports the sale of the new product or service.

This course draws from Theory and Practice to provide Learners with the insights they need to help bridge the knowing-doing gap as they seek to find, frame, and solve problems associated with designing a new business. The general flow of the course is depicted in the figure below.

Figure A. Business Design Lab: A project-based learning experience focused on the design of businesses.

Figure A. Shows an idealized project timeline; your timeline may differ. The most important thing is setting up the project well so that it will run smoothly. In the world of manufacturing, “SET-UP” and “RUN” are key concepts. Manufacturers that spend a lot of time on “SET-UP” tend to not only have a good “RUN”; they also, tend to reliably produce high quality outputs (i.e. products). Project Management might seem different from Manufacturing, but in a broad sense you are attempting to manufacture a good and valuable project outcome. Also, since most companies run on teams who manage projects, learning how to set up a project and then manage the project to completion is a very valuable career skill.

Sessions 01 – 03 are very challenging. Why? Until you understand the client’s initial/current/intended business model, it is very difficult to begin the project. Complicating matters is the fact that Business Models are not something you can understand deeply quickly. So your initial focus should be on understand the Business Concept at the core of the business model. A Business Concept is a short description of an Opportunity. A Business Concept has four dimensions:

Value Proposition – How will you create value for the customer while differentiating yourself from the competition?

Product Definition – What is the product (or service, or experience) that will create value for the customer.

Customer Definition – Who is your target customer and what is their Job-To-Be-Done?

Production-Distribution Chain Definition – How are you going to deliver value to the customer?

Engagement Letter: An engagement letter is a written agreement that describes the business relationship to be entered into by a client and a company. In this course, the engagement letter acknowledges that students are working on a project for the client for the purpose of learning and to aid in their preparation for launching a meaningful career. The Engagement Letter, Statement of Work, and Work Breakdown Structure are written iteratively… they should be finalized after the teams have had enough time to explore the Problem(s) at the heart of the project.

Statement of Work: A statement of work (SOW) is a document that provides a description of a given project’s requirements. It creates value by reducing the likelihood of misunderstandings between the Client and the Consultant. To produce a meaningful Statement of Work, you need to give yourself time to explore the problem (Divergent Thinking and Convergent Thinking).

A key takeaway from project-based learning is the insight that it is very difficult to develop a shared understanding at the beginning of the project about what the project team is actually working on, how the client’s problem can be framed and how the client’s problem should be framed. The Statement of Work helps to ensure shared understanding exists between the Project Team and the Client.

As the project team begins to work their understanding of the problem is likely to evolve. What can project leaders do to ensure that an evolving understanding is shared by everyone as soon as possible? They probably need to think deeply about how to communicate and what to communicate and when to communicate.

Work Breakdown Structure: A work-breakdown structure (WBS) in project management and systems engineering is a deliverable-oriented breakdown of a project into smaller components. Specifically, it is a visual, hierarchical and deliverable-oriented deconstruction of a project. It often is an expanded Gantt Chart which can be made in MS Excel or Google Sheets or Asana. Learn More.

One of the benefits of developing a work-breakdown structure is the ability to understand at a project-level (i.e. all of the members of the project team) who is doing which piece of the project and when their piece is due.

How should deliverables be evaluated? Perhaps “real world” accuracy (which is different from getting the answer right on a test) and actionability (which is different from reproducing academic knowledge for the sake of being able to say “I learned it and then I mastered it!”) are important to consider.

Defining Business Design in Theory & Practice

The Rotman School of Management defines Business Design as a “discipline (i.e. set of tools and processes) that helps entrepreneurs prototype business models and test them with the selected target market segment(s). Business Design looks across all organizational entrepreneurial management and innovation management activities, including contextual understanding before idea generation, and operational integration and implementation after prototyping and testing [in order to transform an opportunity into a business]. The end-to-end focus of Business Design helps you think and act more strategically and innovatively – transforming the impact you have on the world.”

MIT SLOAN uses the term Entrepreneurial Strategy – “a practical and systematic approach for how to undertake the process of exploring and evaluating the core choices that entrepreneurs need to make as they translate their ideas into reality” (i.e. turn opportunities into businesses) – to talk about Business Design. Sometimes they use a more traditional term – “commercialization” – to talk about Business Design.  

At IDEO Business Designers take the potential of “juicy, creative, human-centered innovation and prepare to make it succeed in the [Client Organization and in the] real world [market].” They do this first by “getting to know the client organization and by understanding their organizational capabilities & culture. Next they use “strategy, analysis, and financial modeling as generative design tools, in order to help organizations turn the… biggest, wildest ideas into businesses with long-term viability. To this end, Business Designers generate [observation-based] research findings, and leverage strategic frameworks, opportunity maps, and concept scenarios to set the stage for innovating strategically, rather than developing a tactical response to an emergent opportunity.”

McKinsey has a Business Design consulting practice, LEAP, and uses the term “Business Building” rather than “Business Design.” In this practice, “McKinsey works with established organizations to imagine, build, and scale new businesses—and develop the capabilities needed to do it again and again.”


“The difference between project-based learning and… other methods is that it actually brings a real organization into the classroom where students solve a true problem, [address a real] issue, or [help develop an actionable] strategy that the company brings to them.”

–  Terri C. Albert

(See also Making Project-Based Learning Work in an Online Curriculum: A Panel Discussion and How to Shake Up Active Learning Assumptions).

Precisely because it is so “real world,” project-based learning is frequently uncomfortable (even scary) for students. I encourage you to EMBRACE the discomfort. Please think of this course as an invitation to get out of your comfort zone and into the Learning Zone! (At the project post-mortem, most students report learning much more than the average course. They also tend to be deeply satisfied).

– SMH

‘I never knew how hard it was to communicate professionally and effectively until the client repeatedly [politely but firmly] rejected my presentation drafts. Ultimately, this pushback helped me to become a better communicator.’

– paraphrased feedback from a former student

A significant amount of value is created by setting up the project correctly. Fundamentally, this means understanding and exploring the Problem. As indicated in Figure 1 above, during the first three weeks teams listen to the client and try to understand their perspective on the Problem while understanding that their perspective is a perspective that, like all perspectives, is subject to “bounded rationality.” To say it another way, the Client’s understanding of the Problem is limited and may not be completely… correct!

Learners participating in this course are encouraged to fully leverage their alumni network. For example, if you want a career in consulting, then use LinkedIn or email to reach out to young alumni who are working in consulting, introduce yourself, your career aspirations, tell them about the project on which you are working, and ask them for advice about how they would frame the problem or issue or task…. What an opportunity to learn about the “real world” before you enter the “real world!”

Suggested Reading(s):

  • Han, A., Holloway, C., Sweeney, L., Ciesinski, S., Rawdon, L., Rohan, D., Rosen, H., Siegelman, R. (2010). Note on Creating a Viable Venture, Stanford Graduate School of Business Case E-402. 15 pp.
  • Repenning, N. P., Kieffer, D., & Astor, T. (2017). The most underrated skill in management. MIT Sloan Management Review, 58(3), 39-48.

HISTORY OF BUSINESS DESIGN

Business Design emerged through collaboration among Heather FRASER at Rotman DesignWorks, Claudia KOTCHKA at P&G, Roger MARTIN (then dean of the Rotman School of Management), David KELLEY (co-founder of IDEO, the world’s leading human-centered innovation design agency), and Patrick WHITNEY (then dean of Illinois Institute of Technology’s Institute of Design). Heather FRASER proceeded to refine Business Design over years of teaching, research, and practice while leading DesignWorks at the Rotman School of Management.

The presentation below is from a 2010 Business Design practicum designed by Heather Fraser at the Rotman School of Management in Toronto. Although it can be abstract in some slides, it offers a nice intellectual starting point for understanding Business Design.

This article is a great summary of Heather Fraser’s work in/on Business Design.

Ref.: Fraser, H. M. (2007). The practice of breakthrough strategies by design. The Journal of Business Strategy. VOL. 28, NO. 4, pp. 66-74.

If you prefer to do a deep dive, then you might like Fraser’s book which helped to define the domain and practice of Business Design: Fraser, H. M. (2012). Design works: How to tackle your toughest innovation challenges through business design. University of Toronto Press.

  • see also this page for more on the book, and
  • this page for VukaWorks, her SaaS business focused on the practice of business design.

Another book you might consider is a textbook that was recently published. It is written by Prof. Angèle Beausoleil who is leading the Business Design Initiative at the Rotman School of Management: Beausoleil, A. (2022). Business Design Thinking and Doing: Frameworks, Strategies and Techniques for Sustainable Innovation. Palgrave Macmillan. (Note: I have not had time to review this book as it was published in January 2022).

Note: If we are operating remotely/asynchronously, you might enjoy Remote.com’s Employee Handbook. It is a great introduction to processes that support effective remote work.