Q1. What do you say when someone asks you what you do? ”I’m not sure, but I do it all day!”. We have a chuckle, they say “but seriously…?”. Being primed after hearing a joke, they’ll usually listen intently to my long-winded but more accurate answer which would otherwise put them to sleep. Feel free to use this one yourself if your job-title is hard to get at.
Q2. What are you working on at the moment? How are you making decisions about what to do next? How do you discuss and describe your organisations strategy? Could you show me your business model? Nobody has good answers to these questions. Not Fortune 500 CEO’s, nor small businesses like my Dad who’s a farmer. My team and I are working on tools to help anyone better discuss, design, improve, invent and iterate their business models. Architects, engineers, bankers, everyone has custom designed tools to help them build stuff – but there are almost no practical tools for business strategy. We want to make this nebulous but extremely critical area more visual, practical, and accessible to everyone who’s looking to build a better business.
Q3. What one thing could you not do without as part of your design process? Time for directions and variations. Exploring only one design direction, or ruling out a direction because the variation on the execution is wrong leads to bad results. This is tough because it’s tempting to go with something that looks like it has promise, rather than spending time and money on alternatives you may throw away – especially when time and money are short. What I’ve seen though is the value from exploring pays off and saves time and money in the end. It’s definitely “smart money”.
Q4. What is the piece of work that you are most proud of in the last few years? The book Business Model Generation was a rare project. One where you look back and it and still wouldn’t change a thing! The fact that 470 people early adopters and co-creators helped inform the design as we worked, and then started a movement that turned it into a worldwide phenomenon in 27 languages and 350K+ copies in just 2 years has been amazing. It’s hard to believe, but people actually recognise me in coffee shops from my photo in the book!!
Q5. What does it take to be a better-than-average designer? 3 things. Ego enough to redesign 1 thing over and over. Frank Gehry has an excellent take on this, rather than taking critique and requirements to redesign with humility, he approaches it with ego. Each time he redesigns, it is from a place of higher understanding so of course he will do better. You need to have that approach and welcome redesigning a process. Patience to see it unfold. The feedback cycle time is long here. Getting feedback from the market, from customers, from partners, to see if your design will live and breathe in the world takes time. Conceptual basics of the building blocks of business. Just like other forms of design, there are basics to learn. Most people tend to confuse the basics together into a big soup which leads to a lot of mistakes. You can’t properly identify problems, you can’t talk in a shared language with your colleagues, and you can’t get a good process going if you don’t have this. If you’ve been in business a while, chances are your “soup” is completely congealed and you’re going to have a hard-time shifting your worldview. If you’re newer, you’re going to adopt clear thinking from the start.
Q6. Where do you go for inspiration? We do a lot of retreats, at least 4 times a year. High in the mountains, out on beaches, down the fjords, far in the woods, and other secluded landscapes are my favourites. If you’re a naturally lazy person like me, you need inspiring places to help you work!
Q7. What’s the new business model/idea you’ve seen recently that’s just made you go WOW, that’s awesome? The models where someone shows how an entire industry was broken and nobody knew it. I love how Trent Reznor of Nine Inch Nails has really altered the traditional “band” business model. He’s done everything from giving away music, making his original studio files available to hardcore fans, and augmenting the conference experience via a smartphone app. Before him, it was sell your should to a label, get radio play, hope for hits, and make money on the road. He showed musicians new ways of creating community and earning from that community. In another space, SunEdison did an amazing job of reinventing the way solar is sold. They reduced the upfront investment to zero by signing “Power Purchasing Agreements” with customers and then using those as a collateral to Investment banks to get loans. They would use the loan to put up installations for customers and just sell the power, and then pay off the loan. Without a new business model, they’d never reach the types of customers, and never have achieved the scale of one the largest providers of solar energy in the US.
Q8. What is an example of a progressive/new business model in the arts sector which has worked really well? Small venues typically have a bigger time booking big name performers. Recently, a great organisation in Ontario was able to create a value-network of 20 small venues, which offered to book 20 nights in a sequence to big names. The aggregate ticket sales were similar to the size of a few big events, with far lest risk. The performers tour managers didn’t have to pay for a large venue or the larger crew required to set up, or large promotional costs. Keeping things lean in this format actually led to big-name size pay and a focus on the artist – not the logistics of promoting the art. When the small venues and the big name each adjusted their business models to work together in a new way, they each profited more.
Q9: Where do arts organisations and non-profits tend to go wrong?
Often, anyone who’s not for profit, or mission driven makes the mistake of thinking they don’t have a business model. Those are for capitalist greed-mongers with no values, not for us, right? Wrong. Every organisation has a business model, and every organisation has values that inform it’s design. You provide a certain value proposition, to a group of people, and have revenue streams and costs. Every business model can be improved to better serve customers, produce desired outcomes within the organisation, and in the world.
Q10. If you had the rapt attention of all the people who work in arts & culture in Scotland many of whom are interested in business model innovation what would you like to imprint on their brains? They can’t afford not to free up time and resources for it. Everywhere, industries refusing to invent new business models are failing. in just hours, you can get of low hanging fruit by patching up your current business model. Just by mapping your current business model with key stakeholders, massive holes and improvements will be spotted and ideas on how to fill those will organically arise. Then, once you’ve got the hang of it, you can start to design alternatives, and test your assumptions before betting the farm on it. Using tools like the business model canvas make doing effective business model innovation, social, tangible, accessible, and actually quite good fun!!
Alan Smith is a Business designer and co-founder of Strategyzer. Based in Toronto he is the lead designer on the best selling Business Model Generation & Business Model You. You can follow him at thinksmith.tumblr.com and @thinksmith