Ignacio Pérez Alcázar
Traditionally, business model design has been work of consultantsor technical experts in their office. Combining this expertise with user driven innovation in the field, more efficient and more feasible business models can be created
75% to 93% of all innovations funded with the R&D budget do not achieve enough revenue. This is especially true for projects funded with public Money, as FP7, AAL or CIP. Why? Because market studies are not enough. Market evidence is needed.
More and more, the limitations of the working model based on sociological, market or consumer studies are questioned. While the degree of deepness studies can achieve is certainly of true advantage, at the same time they lose flexibility and market contact. A study is like a high resolution picture, while working with users is like a recording with a mobile phone: low resolution, but it captures reality as it shows itself.
ValueCreation has transferred its user driven innovation methodologies to the development of business models. If user involvement is so effective for technology and product co-design because it improves user acceptance significantly, shouldn’t it as effective to know how the market perceives the value of a given technology or product? Furthermore, if user involvement can create so many organizational improvements and savings, shouldn’t it work also to identify distribution channels, revenue streams or successful claims?
With this idea in mind, ValueCreation has worked since March 2011 with different companies, research centers and knowledge centers in order to develop user experience based business models, They were created with the participation of potential clients, final users, research and knowledge centers, potential competitors as well as other stakeholders, such as hospitals.
The products and technologies we worked with were virtual simulation tools, e-health technologies and social technologies.
Results were more than positive. All together:
- For one single product dual models could be identified. Service and product oriented.
- New ways to make Money even with open source software could be found
- For each case, two or three revenue flows have been identified
- For each case, between four and six new market segments were discovered, including specific needs and expectations
- Significant changes in the value proposition could be stressed. In one case, six new value propositions emerged, which means an increase in value of 400%.
Differences with traditional consulting
The main difference with traditional consulting is that the business model was designed ad-hoc for specific products and for a specific organization. The value propositions that were identified, the market segments as well as the revenue streams have been achieved through the direct interaction with stakeholders and users, which means EVIDENCE.
Participatory design techniques were applied, as well as business model generation with cycles and iterations with stakeholders following the ISO 9241-210 norm. This way a true co-design process was achieved. Finally, a 4 year revenue projection could be calculated according to the designed business model.