Hacking Business Models

I’ve been doing a lot of interviewing lately. Beyond meeting some really nice people, this means I have to explain what the idea of Business Design is a lot. To be honest, it’s not always an easy thing to describe. The idea of using design sensibilities to solve business problems…well it’s easier done than explained. Much of the act of Business Design is dictated by the problem you’re solving. This probably has more to do with design than business –business likes standardized processes, design likes appropriate approaches. When you design, you go about things is almost intentionally different every time. To top it all this off, the idea of Business Design is still very much emerging, so it’s changing all the time. It’s also a hip phrase people throw around a little too loosely. All this makes explaining what I do sort of a hot mess.

Yesterday I was interviewing with a colleague of mine, Joe. Without realizing it, I think he blurted out a pretty perfect description of the idea of business design. He simply said, “we hack business models.”

I really love that statement because of all the implications of the idea of “hacking”. For me hacking implies that you’re working with an existing system and pushing and pulling on its boundaries to see what will happen. Tools can be crude and fast, but there is an eye to understanding and evolve the larger system. Hacking implies that what you’re doing isn’t a science, but there’s probably a lot of underlying laws ad principles involved. There’s no certification to be a hacker, but not everyone can do it. And to be a good hacker, you have to be pretty curious, confident, and inspired.

As I frame Business Design loosely as a hacking exercise, it also starts to draws some boundaries for what is and what isn’t business design to me. Businesses tweak their model all the time, and not every change is a design. If you increase the price for your goods, that’s not really design. If you change your entire pricing structure to communicate a new type of value, that’s probably business design. Netflix raising rates isn’t business design. Netflix launching a streaming-only pricing option is definitely the result of a lot of hacking and some pretty smart business design.

All this hacking leads me back to the idea of a system. Businesses after all are systems that create/provide value. That’s very academic sounding, but thinking of a business as a system that must remain in balance is sort of the first step to being able to frame and solve problems differently. (And there’s a ton of companies who think of a business as a kit of parts.) These systems have many interrelated parts (and people). As you add or remove some element of the business, a different component will be affected. As you design the customer experience, you have to design the business model that supports it. As you design the business model, you have to think about what sort of experience you can provide.

It’s all about the system; it’s all about balance.

2 comments

  1. First, I find the writing on here insightful and interesting. Using hacking as a metaphor for business model innovation really resonates with me. Especially because hacking implies that your making things, trying them, seeing where they work and don’t work, and then remaking them so that they accomplish your goal. I think the hacking metaphor might fit less closely in one area though. Although, I don’t hack, I imagine that many hackers start out with a specific goal in mind and so they build straight towards a solution. Whereas, the business model hacking I’ve attempted (and where I think design comes in) involves an exploration of possibilities, a process of synthesis and abductive leaps that lead to new and insightful ideas which you probably couldn’t arrive at through rigorous analysis or iterative testing.

    I couldn’t help but think of the balance required to maintain an ecosystem (in nature) when you were discussing the concept of balance. I’m interested in how you facilitate the process of designing the customer experience and the business model. Do they happen in tandem or do you seek the ideal experience and then try to pair that with a viable business model? I am also curious to know that role ethnography has in your business model hacking.

    I thought you might find this post on the overlap of lean startup/customer development ideas and business model prototyping ideas interesting: http://www.businessmodelalchemist.com/.

    Does this example fit your model of business model hacking? Might you have similar examples that you could share? Do you have a loose set of the “underlying laws and principles” you mentioned?

    cheers,
    @n_evans

    P.S. Let me know if you’re ever in Chicago. I’d love to chat.

  2. the hack metaphor works for me
    (design boardgames for business context)

    because hack means we are/Iam doing (in action) with the model. we are not talking about, visualizing, conceptualising it…. we just START….

    so no standardise process
    just make it up as we go
    build the airplane as we fly

    example:
    take an iphone app
    you just START PLAYING with it
    immediately
    so it activates our entire intelligence
    full body intelligence

    and then you adapt, tweak, twak
    snap this, snag that what you like,
    thumbs down whats not great
    building many repositories of ideas
    all in all hacking
    ……

    in my world a business is a living system
    just as human beings are
    just as universe is

    living system = a system with intelligence
    so adapts
    as in nature
    —-
    so the biggest hack I do
    is observe nature

    when in doubt, look at nature
    has been a guiding light for me
    —-
    thankyou for post
    very enjoyable to read
    🙂

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