Design Thinking Business Model
In 2018 a major UK construction company, Carillion crashed, leaving tens of thousands of people across the country without jobs and even higher numbers of contractors unpaid. It also resulted in delayed infrastructure projects such as hospitals, prisons and roads.
An economic disaster for employees and the small companies owed money. For those left without hospital beds or the means to travel to receive the treatment, it was another kind of catastrophe.
A Financial Times article reported that between 2012 and 2016, the company paid out £376m in dividends while generating a profit of £159m. How did they finance the difference? By running up debt, some fanciful accounting and selling their assets. None of that matters to those who lost their pensions, jobs or payments, however.
Greed, bent accountants and books, indifferent politicians and unaccountable leaders are not isolated incidents. The sub-prime mortgage and banking crisis springs to mind; Enron springs to mind, there are probably hundreds of others.
And you must excuse me if I don’t break into a round of excited cartwheels at the announcement from Johnson this week that he’ll build his way out of the Covid-19 recession. Make sure you get paid upfront folks because governance hasn’t changed since Carillion.
Furthermore, controversy mires his housing secretary after he bypassed local council objections to approve the build of a new multi-million-pound development in East London. Robert Jenrick was forced to admit the decision was unlawful and overturn the approval after a local opposition outcry, but the PM is trying to resist an inquiry.
Three years since we watched the Grenfell Tower burn down and they’re still trying to allow developers to bypass regulations.
Will things ever change?
I am one of those who think, like Nobel, that humanity will draw more good than evil from new discoveries. — Marie Skłodowska Curie
I think so, we need to be optimistic, what else can we do?
I’m going to take one more dip into a status quo shortcoming and then look at other, more positive ways of operating. Then I’ll finish with a list of roles that we can take on to jump on board the new world thinking.
Covid-19 Antiviral Drug
Maybe you’ve heard the news that the pharmaceutical company Gilead Sciences have developed an antiviral with potential — their words — against Covid-19 which the US government have snapped up supplies of, 90% of the availability for the year no less.
But if you’re not in the US, or your health insurance wouldn’t pay over $3000 for a course, or your public hospital hasn’t realised they have received supplies don’t feel too bad.
The NY Times article on Remdesivir shows only a 4 day improvement and no real impact on the mortality rate.
What I find more surprising than the cost of the medicine is the way they value it. In an open letter from Gilead CEO Daniel O’Day says;
…earlier hospital discharge would result in hospital savings of approximately $12,000 per patient. Even just considering these immediate savings to the healthcare system alone, we can see the potential value that remdesivir provides. This is before we factor in the direct benefit to those patients who may have a shorter stay in the hospital.
Sorry, but did he just say that the means of calculating the value of a health drug was the economic response from the healthcare system, a system which is heavily influenced by the price of his drugs?
Perhaps I’m naïve but isn’t it strange that a company who provides a health product doesn’t think that the patient benefits are essential in calculating the value? How can they possibly price something without knowing this?
Is this right? That the value derived from a health product is constructed entirely in economic terms?
Depressed yet? Don’t worry, let’s turn a corner.
In 2019 I attended the Service Design Fringe Festival in London, which was the first time I’d stumbled across the concept. After all, I’m not a designer, but someone mentioned a place where innovators, designers and curious folk were coming together to showcase new ‘design for good’ case studies.
Curious, that’s me.
The terminology is commonplace in tech and design, but in an ideal world, the principle would apply across all industries, companies and governments.
It’s looking at the way things are created and transacted in our society and economy. At my super-simplified, layman’s level of understanding, service design means ensuring that a service meets the needs of the end-user.
How many of your services meet your end-user needs? Do you get delighted when something works? Why is that? Because it’s not the norm.
Now onto design thinking.
Design thinking is a non-linear, iterative process that teams use to understand users, challenge assumptions, redefine problems and create innovative solutions to prototype and test. Involving five phases — Empathise, Define, Ideate, Prototype and Test — it is most useful to tackle problems that are ill-defined or unknown.
When you put together design thinking and service design — a creation of services that serve a user (ahem, not a shareholder) then don’t we have a recipe for driving real change? We’ve seen people coming together for solution-based design thinking.
- Private citizens and labs are printing 3D protective hospital gear for front line workers.
- Communities are rallying to check in on their isolated friends and neighbours.
- Supermarkets are allocating special times to enable elderly people to shop safely.
Shareholder Model Vs. Design Thinking Models
Mariana Mazzucato, economist, professor and author of The Value of Everything and The Entrepreneurial State drives an alternative model to the shareholder model, the Stakeholder Model.
In an interview for the Future of Work Symposium, she talks about the shareholder model sometimes being a value extraction model; profits, labour, innovation, all the resources are poured into the business, and the outgoing value is sent into shareholder dividends. This fuels inequality and stifles innovation and growth.
In the case of Carillion it destroyed livelihoods.
Her model calls for Stakeholders, parties (public and private) who share risk as well as the profit when companies succeed. This enables the necessary amount of risk to be ventured to allow for real innovation. It mitigates conditions for government bail-outs. It’s a model that encourages mission-based investment. It’s bold and the kind of thinking that put man on the moon.
At this year’s World Economic Forum meeting in April a new model particularly suited for the Covid-19 Era cited six Stakeholder Principles that could help alleviate the pain caused by the economic shutdown.
- Employee safety
- Business continuity with suppliers and customers
- Fair prices for essential supplies for consumers
- Support for government and society
- Maintain the long term viability of companies for shareholders
- Continue sustainability efforts, including the fight for climate change.
The model allows for a form of mission-driven innovation to occur; a mix of private and public investment that promotes design thinking for some of our global problems, like health, climate change and inequality.
Doesn’t that sound like much better operating principles than the singular goal of keeping the shareholder dividend high?
Let’s take at two different models for the management of a nursing home for elderly people.
When the priority is the profit, the end-user is a happy shareholder.
Consider a patient who was treated in a hospital affected by the virus outbreak and wants to come back to the home. A shareholder model may, not saying they would do something so heinous; they may prioritise filling the bed space over the needs of the other patients.
It could mean that the higher goal of keeping those shareholders happy dictated that the residents’ health and comfort needs were lower down the priority list.
A business that had service design thinking at its heart would prioritise the needs of the patients ahead of filling one additional bed. Furthermore, decisions like food, nutrition, the comfort of the home and the safety of the patients would be part of the model of the institution.
A Covid-19 infected patient would not be admitted to a home that had been designed with design thinking principles.
Where would you prefer to send your loved ones?
Am I oversimplifying things? Maybe, but having a picture of ideal makes it a lot easier to iterate towards than ambling on for something better.
Industries In Positive Flux
There are so many extraordinary movements happening at the moment. From health tech products that are addressing issues like loneliness and dementia, financial services projects that are assisting the path to financial inclusion. The energy transition at a personal transport level, to a global carbon footprint reduction and social media platforms that are finally taking responsibility for spreading hate.
Marketing & Communications
How Can We Join In?
There are a number of roles in the government of new order, you could probably work across multiple. The point is that no role is too insignificant.
Ethical consumption has been around for a long time.
- given up meat and dairy in protest against factory farming
- ditched your shareholder model bank in favour of an ethical bank
- given up your car in favour of an EV
- or made a conscious decision to take less air travel — it’s not that hard now but can we all keep it up?
- started to cut down our plastic waste
- consumed less.
Support the kind of projects that share your vision. Most companies now have a website and they’ll likely have their missions and values listed. Sometimes these sound like spin but you should be able to tell.
I know we have tough economic times ahead but there are still choices about which jobs we take on over others; especially as a freelancer.
Keep a note of the kind of projects that stir your soul and work towards them.
Can you create a website, run a podcast, write a blog, shoot a web series, make a video, graffiti a wall to spread the word about world changing projects?
Share these stories, reach out to creators. It’s never been easier to reach people through social networks and in my experience people love to know that they’ve inspired you, no matter how high up the chain they are — mission-driven people anyway.
We can share stories, listen to debates, give air time to the movers and breakers.
I received a newsletter email from a writer who announced he was no longer making investments in non-sustainable companies. It was great to hear.
If you’re lucky enough to have money to invest, you could think about investing in a mission-driven endeavour to enable projects that are applying design thinking to local or global issues. Especially if you’ve made some good money so far investing.
And the most robust verb of all in any cause; action. Be an actor or an agent for change. Look after your neighbours, check your news sources, consume less, take a couple of days off dairy a week, wear a mask, don’t throw your shit on the beach. Be nice. Don’t cycle on the bloody pavement. Dis-invest from unethical banks.
This is our time to make a change people. We can fix the rotting structures if we can operate together and with design thinking. People say that things have always been this way but it’s not true; we’ve never had the ability to reach each other and we’ve never had the technology available to mobilise the numbers.
Let’s not waste this opportunity.
Thanks so much for reading. If you liked this blog you might also like Getting Back On The Shoulders of Giants.