A review of the use of Design Thinking methods in business model/business model innovation research.

Olivares Ugarte, Jazmin Estefania ^1,2*+

¹Department of Design Sciences, Lund University, Lund, Sweden;

² Research institute of the Faculty of Sciences and Technology, Universidad Mayor de San Simon, Cochabamba, Bolivia

*[email protected]

[email protected]

⁺ Doctoral Student, Department of Design Sciences, CIRCLE – Division of Innovation Engineering, LTH –Lund University (Sweden)

Unit of Transfer of Technology-Universidad Mayor de San Simón (Bolivia).

Extended abstract

The main challenge for companies to generate sustainable business models is to create innovative products and services that are not only economically feasible, but also socially and environmentally feasible. Business model (BM), in general, articulates the logic, data and other evidence that supports the value proposition and a viable revenue and cost structure offered by the company. The role BM plays is important because it contributes to improving the way companies conduct their business under uncertainty (Osterwalder & Pigneur, 2010)

In this way the BM seeks to provide solutions that are economically sustainable. On the other hand, an approach that seeks to provide creative solutions that are economically, socially, and environmentally sustainable is Design Thinking (DT), which started to receive attention when it comes to business innovation.

Design thinking as an iterative method of developing innovative ideas seeks to solve complex problems through innovation and the development of novel concepts. The process is iterative and allows returning to one or more phases. The objective is to test multiple possible solutions to arrive at an optimal one (Brown, 2008; Denning, 2013). In this way, Design Thinking could be a potential alternative to improve all or at least part of the current business modelling processes due to the broad and generic applicability of the concept (Brown, 2008). Kraus et al., (2020) show that combining the DT approach with the BM is the key to a sustainable value proposition, as it combines economic and environmental objectives.

Despite the increase in research focused on the use of design thinking methods related to business models, there is still little clarity on the contribution of DT in facilitating development of new business models or changing existing business models, i.e., business model innovation. Thus, there is a need to clarify the state-of-the-art in this field.

This paper seeks to answer the following research question:

How and why design thinking is used in business model research?

To answer the research question, we perform a systematic literature review using a search string in Scopus. The search query was composed of the following keywords “business model*” AND “design thinking*”. The search string included articles and conference papers of Engineering or Business, Management and Accounting Subjects areas in English or Spanish language. The search query yielded 55 articles, of which 21 articles were filtered because they showed some relationship between BM and DT.

Preliminary results

From the review of 21 articles filtered from Scopus, four main research themes where design thinking (DT) is used in business models (BM) were identified: business model innovation, sustainable business model innovation, circular business model innovation and product-service system.

In the first theme of business model innovation, several studies were found that focus on how established companies apply design thinking in the four processes of business model innovation (exploration, design/development, testing and implementation), to make them more adaptive and flexible to take advantage of market opportunities.

According to (Geissdoerfer, Bocken & Hultink, 2016), the use of design thinking methods in the value innovation process provides an opportunity to create new types of value, as well as to expand the range of different stakeholders to whom the value proposition can be addressed. The value innovation is an important priority for the top management of companies, where creative and design thinking methods play a promising role as it offers an effective approach for the ideation of new values (Leavy, 2010).

In the second theme, Design thinking was found to be a suitable approach for sustainable business modelling in combination with value mapping (Geissdoerfer, Bocken & Hultink, 2016) because this tool is intended to facilitate the creation of sustainable value for firms within their existing business models (Bocken, Rana & Short, 2015).

In the third theme, design thinking was used as a base to create a conceptual process model called “Circular Sprint” for circular business model innovation that can guide practitioners in the early development of a Circular Business Model (CBM), in a time-efficient manner and in an online context (Santa-Maria, Vermeulen & Baumgartner, 2022). One of the most relevant findings of this Circular Sprint framework is the shift away from a user-centric focus to a more systematic/holistic perspective of DT approach and those entailing a sustainability orientation (or circular economy orientation).

In the last theme, design thinking becomes more important for the development of Product Service System (PSS) (Scherer JO et al., 2016), a business model that combines technical products and services over the entire product lifecycle (Meier, Roy & Seliger, 2010). DT approach is integrated into the concept for the development of availability-oriented business models for PSS through the customer-oriented methods, i.e., Persona analysis, Value network mapping and Customer Journey (Kölsch et al., 2017).

By using these methods of DT, it is possible to match customer’s needs with technological feasible solutions, which should be part of a viable business strategy and can create customer value and market opportunity (Brown, 2008).

In general, the conceptual contribution of the present research with respect to the themes found allowed the construction of a database that was obtained from the selected scientific contributions. The reference of each article shows the application of DT in the different business models and contexts as explained above.

Expected contributions

The benefit of using Design Thinking in business model research can help improve model effectiveness, increase innovation, improve adaptability, and increase efficiency in the development of different types of business models.

The first benefit of effectiveness is given by focusing on user needs and desires, and efficiently testing and iterating ideas, it manages to develop an effective business model that satisfies customer needs and generates revenue.

In the second benefit, the DT fosters innovation by applying the creative and out-of-the-box approach, thus being able to develop unique and innovative business models that differentiate themselves from the competition.

The third benefit consists of DT by working collaboratively and adopting a continuous learning mentality, enhances the ability to adapt to changes in the environment and changing customer needs.

The last benefit consists of DT increases efficiency in the development of the business model by applying the experimentation and iteration approach, which allows to quickly identify and eliminate ideas that do not work, thus reducing costs.

Main avenues for further research

Design thinking has been used to research and develop new business models in several areas, including technology, services, and products.

Some of the main avenues for future research in the use of DT in business models are the implementation and adoption of emerging technologies; the innovation and creation of new products and services; the application of design techniques for the creation of more adaptive and resilient business models and finally the scalability and sustainability of business models to create greater corporate social responsibility. It is important to mention that these topics are constantly evolving, and new developments and trends emerge over time.

Keywords 

Design Thinking, Business Model Innovation, Sustainable Business Model Innovation, Circular Business Model Innovation, Product Service System. 

References 

Bocken, N.M.P., Rana, P. & Short, S.W. (2015) Value mapping for sustainable business thinking. Journal of Industrial and Production Engineering. 32 (1), 67–81. doi:10.1080/21681015.2014.1000399.

Brown, T. (2008) Design Thinking. In Harvard Business Review. 86 (6), 84–92.

Denning, P.J. (2013) The Profession of IT. Design thinking. In Communications of the ACM . 56 (12), 29–31.

Geissdoerfer, M., Bocken, N.M.P. & Hultink, E.J. (2016) Design thinking to enhance the sustainable business modelling process e A workshop based on a value mapping process. doi:10.1016/j.jclepro.2016.07.020.

Kölsch, P., Herder, C.F., Zimmermann, V. & Aurich, J.C. (2017) A Novel Concept for the Development of Availability-Oriented Business Models. Procedia CIRP. 64, 340–344. doi:10.1016/J.PROCIR.2017.03.063.

Kraus, S., Filser, M., Puumalainen, K., Kailer, N. & Thurner, S. (2020) Business Model Innovation: A Systematic Literature Review. International Journal of Innovation and Technology Management.17 (6). doi:10.1142/S0219877020500431.

Leavy, B. (2010) Design thinking – a new mental model of value innovation. Strategy & Leadership. 38 (3), 5–14. doi:10.1108/10878571011042050.

Meier, H., Roy, R. & Seliger, G. (2010) Industrial Product-Service Systems—IPS2. CIRP Annals. 59 (2), 607–627. doi:10.1016/J.CIRP.2010.05.004.

Osterwalder, A. & Pigneur, Y. (2010) Business model generation: A handbook for visionaries, game changers, and challengers.

Santa-Maria, T., Vermeulen, W.J.V. & Baumgartner, R.J. (2022) The Circular Sprint: Circular business model innovation through design thinking. Journal of Cleaner Production. 362, 1–14. doi:10.1016/j.jclepro.2022.132323.

Scherer JO, Kloeckner AP, Ribeiro JLD, Pezzotta G & Pirola F. (2016) ProductService System (PSS) design: using design thinking and business analytics to improve PSS design. . 47, 341–346.