Our Business Prototyping Methodology

Introduction to the Business Prototyping Methodology

Oliver Grasl
Friday, February 17, 2017

A brief introduction to the business prototyping methodology

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In this series of Prototyping Business Models And Market Strategies, you will learn all about our business prototyping methodology –we will explain the methods, techniques, and tools we at transentis use to help our clients to transform their business and realize their potential.

Now you might ask: Why do we need a methodology to manage the complexity of business transformation?

There are three simple reasons for this:

Firstly, Why Change is Inevitable But Progress is Not – modern businesses need to transform continuously at a very high pace, or they fail.
Secondly, business transformation is a very complex undertaking – you have to make many high-impact decisions under great uncertainty. You have to ensure the right actions are taken. You always have too little time. And all the while you have to continue your current operations.
Thirdly, most businesses are highly specialized and that is what makes them successful. But because of this specialization, they often do not have the skills or resources they need to transform.

This series of blog posts on business prototyping, along with the videos and exercises accompanying them, will provide you with the knowledge you need to help your business transform successfully.

Why Change is Inevitable

But why is change inevitable?

Internal and external drivers force companies to make frequent and far-reaching changes to their business model, their organization and the technology supporting it!

Most of our clients are engaged in an almost continuous business transformation process.

Why is it easy to become overwhelmed by the complexity of transformation?

Business transformation is a complex undertaking because you are forced to continue your current operations and re-design and transform them at the same time, which always seems to me is a bit like flying a plane at a high speed while in the process of fixing the wings.

Clearly, you need an approach to managing business transformation – we call the approach we use business prototyping.

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We have been continuously developing the business prototyping methodology over the last 15 years – we have tried and tested lots of the great thinking and innovating tools and techniques that are available in the market, we have streamlined them and have put them together in a new way. All with a focus on managing the complexity of business transformation.

We are a very hands-on consulting boutique that works closely with our clients' decision-makers and domain experts; we do not just sit at the sidelines telling others what to do, we actually roll up our sleeves and use the business prototyping tools and techniques ourselves.

Business prototyping is quite a versatile methodology:

We use it to help our clients to understand the situation they are currently in, to explore possible future scenarios and to design business models that are viable for these scenarios.
Once our client has decided which direction the business should take, we help them to design and implement appropriate organizational structures and processes.
And because technology is such an important enabler for new business models, we spent a lot of our time helping our clients to align their IT systems with business demands.
Business prototyping helps you to make better decisions in complex situations.

Let me give you three recent examples of where we have used business prototyping:

We have applied it in the tobacco industry, to help our client to analyze the factors that will impact the adoption of new e-cigarette products, to understand the impact of regulation and to develop potential future scenarios;
We have applied it in the energy industry, to help our client to analyze the impact of the transition from conventional energy to sustainable energy on its business model;
We have applied it in the transportation industry, to help our client to design and implement a new, fully automated service which will generate billions of euros of revenues over the next years.

So business prototyping is about managing the complexity of business transformation.

Now I have said quite a few words about change and transformation – before we get into the details of the methodology, let us take a closer look at complexity itself.

A Closer Look at Complexity

Once in a while I like to browse the internet to look for interesting quotes – it turns out complexity is a very rich topic for this. I think my current favorite quote is this one by the British business magnate and investor Richard Branson:

“Complexity is your enemy. Any fool can make something complicated. It is hard to keep things simple.”

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I wholeheartedly agree with this quote and what I particularly like about it is that Richard Branson makes it clear in the last sentence that simplicity is not a state you reach, but it is a process you have to keep working on again and again.

My personal experience is that when creating something new – be it a business, a product or service – you often end up designing a system that is too complex initially. It is only once you have seen it in operation and you understand it better than you can start simplifying it.

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This is echoed by a further quote by the US-American leadership guru Andy Stanley:

“Growth creates complexity, which, then again, requires simplicity”

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In a similar vein, the great British philosopher and mathematician Alfred North Whitehead said:

“The only simplicity to be trusted is the simplicity to be found at the other side of complexity”.

The Business Prototyping Methodology is designed to help you find that kind of simplicity.

What kinds of complexity do we have to deal with during business transformation?

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I like to differentiate between three different kinds of complexity, mainly because they arise for different reasons and you need different capabilities to deal with them properly:

Detailed complexity
Social complexity
Dynamic complexity

Detailed complexity arises because of the multitude of things we have to deal with.

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In a large transformation program, for instance, it is not uncommon that you have to deal with hundreds of business processes and organizational units and at least as many IT systems, which transport millions of pieces of information. You have to handle thousands of requirements, tens of thousands of action items and fill hundreds of positions in the transformation team.

Mostly, you do not have much time before the program has to deliver real value, so you have to handle all these details in a very short space of time. Needless to say, it is very easy to lose sight of the big picture and get lost in details.

Business prototyping provides you with the methods necessary to deal with detailed complexity – in particular, it helps you to work on multiple levels of abstractions, so that you can ensure that everyone involved understands the big picture, without losing sight of important details.

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Added to the detailed complexity comes social complexity: we have to deal with many people from different departments and companies with different work ethics, from different countries with different cultures. Often there is a language barrier, which makes it even harder to formulate goals, requirements and actions in a precise, unambiguous way.

Unfortunately, it is not uncommon that we have to deal with people over large periods of time (sometimes even many years) on a regular basis via e-mail, web meetings and phone calls, yet you never actually get to physically meet them.

In such settings, it takes a large amount of effort to make sure that everyone is on the same page.

Business prototyping offers tools and techniques to deal with these challenges – it is a very participative approach that ensures you involve those people who are relevant to a particular issue on a continuous basis, tapping into their collective brain and reaching a shared understanding.

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To make things even harder, we need to deal with dynamic complexity. In a business transformation setting, dynamic complexity arises for two reasons:

Firstly the system you are trying to transform, your business is a dynamic system itself because it is constantly interacting with an environment that is itself volatile.
Secondly, the transformation process itself will be dynamic, not least because the concrete goals you are trying to reach through the transformation quite often change, especially at the outset.

Thankfully, there are often underlying patterns that cause these dynamics, and business prototyping provides you with the mindset and tools for understanding and dealing with these patterns.

In fact, right after this introduction, we are going to learn about causal loop diagrams, which are a great tool for analyzing dynamic interdependencies in complex systems.

Summary

Thank you for watching this Introduction to Business Prototyping. The key points to take away today are:

Modern enterprises have to transform almost continuously at a high pace to remain competitive.
Business transformation is a complex undertaking.
The business prototyping methodology was created especially to deal with the complexity of business transformation.