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Business Model Innovation & Introduction to Design Thinking

Module: Module 3 — Strategy & Senior LeadershipCode: BMIIDT (SGA)Faculty: Prof. Srinivas GuntaSessions: 2Status: ✅ Drafted

Big idea​

Business Model Innovation (BMI) and Design Thinking are the two complementary disciplines for inventing how a business creates, delivers, and captures value — not just what it sells. The working tool for BMI is Alexander Osterwalder's Business Model Canvas, a one-page map of nine building blocks (Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships, Cost Structure). Design Thinking, popularised by IDEO and Stanford d.school, is the human-centred process for discovering the customer problem worth solving: Empathise → Define → Ideate → Prototype → Test. The two combine: design thinking generates and validates the value proposition; the canvas then stress-tests whether the surrounding business model can profitably deliver it.

Key concepts​

  • Business Model Canvas — nine blocks. Customer Segments + Value Propositions (the who and what); Channels + Customer Relationships + Revenue Streams (the interface); Key Resources + Key Activities + Key Partnerships + Cost Structure (the back-end). Works because it forces visible trade-offs across all nine.
  • Patterns of business-model innovation. Unbundling, long tail, multi-sided platforms, freemium, open business models. Most disruptors innovate the model more than the product (Netflix vs Blockbuster, Uber vs taxis, Airbnb vs hotels).
  • Design thinking process. Empathise (immerse with users) → Define (write a sharp problem statement / point-of-view) → Ideate (diverge then converge) → Prototype (cheap and quick) → Test (with real users, iterate).
  • Empathy as discipline. Ethnographic observation, in-context interviews, jobs-to-be-done framing, journey mapping. The goal is the unstated, latent and workaround needs the customer cannot articulate in a survey.
  • Prototype to think, not to ship. Paper sketches, storyboards, role-play, Wizard-of-Oz, clickable wireframes. Prototype fidelity should match the question you're asking (low for desirability, high for usability).
  • Coupling BMI and Design Thinking. Design thinking discovers a desirable value proposition; the Canvas tests whether the model around it is feasible (can we deliver?) and viable (can we capture value?). All three legs must hold.

Self-check​

A team has spent three months building a beautifully engineered IoT product based on internal hypotheses about customer needs. Launch is in four weeks. Through the design-thinking and BMI lens, what is the most important question to answer first — and what tool would you use?

  • A. How will we market it? — Build a comms plan
  • B. Have we validated that real users have the pain we assumed, and that our value proposition is desirable? — Run a fast Empathise + Test cycle with a low-fidelity prototype against 10–20 target users before launch. If desirability fails, no amount of marketing fixes it
  • C. What is the price point? — Run conjoint analysis
  • D. Which channels? — Map distribution
Business Model Canvas — nine blocks
Customer Segments, Value Propositions, Channels, Customer Relationships, Revenue Streams, Key Resources, Key Activities, Key Partnerships, Cost Structure. One-page map; works because trade-offs across the nine are forced into visibility.

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Continue learning​

🧰Strategyzer · ToolBusiness Model Canvas (Strategyzer)Osterwalder's canonical Canvas with downloadable template, video walk-throughs and the linked Value Proposition Canvas.🧰IDEO · ToolIDEO Design ThinkingThe IDEO methodology library — case studies, templates and the human-centred-design starter kit for first-time teams.🎓Stanford d.school · CourseStanford d.school ResourcesThe d.school's free open library — the bootcamp bootleg, method cards, and process guides used by the world's top design programmes.📄HBR · ReadDesign Thinking (Tim Brown)The HBR article that mainstreamed design thinking for executives — still the cleanest one-read framing.
🪞 Apply it — reflection prompts
  1. Sketch your firm's current business model on the nine-block Canvas in 20 minutes. Which block has the weakest evidence behind it — and what would it cost to test?
  2. For one initiative on your roadmap, score it on desirability, feasibility, and viability. Which leg is weakest — and is the team currently working on that leg, or somewhere else?
  3. Pick a competitor who recently disrupted your category. Was it product innovation or business-model innovation? What would the equivalent BMI move look like for your firm?

📝 Going deeper. Alexander Osterwalder & Yves Pigneur, Business Model Generation (2010) is the canonical Canvas reference; their Value Proposition Design (2014) deepens the desirability work. Tim Brown's Change by Design (2009, IDEO) is the founding design-thinking text; Tom & David Kelley's Creative Confidence (2013) is the most readable companion.