Business Ecology Model
By Andrew Skurdal, Lydia Hummel, Leigh Douglass and Laura Brandmeier.
Issue 1 Spring | Summer 2009
Every enterprise starts with a seed of an idea that is nurtured by the people who see value in that idea and who invest time, money, knowledge and expertise to help it grow. There are also those who supply the resources, materials, network and facilities to realize an idea and bring it to market. An organization with a holistic perspective considers the complexity of the systems and operations involved in delivering products to communities of consumers. An understanding of how a business interacts with communities and ecologies can be communicated at numerous levels and experiences. It can then be applied to new enterprises, particularly when an organization has integrated a triple bottom line approach (people, planet, profit) into its operations. We believe that the ecology of a tree is a useful metaphor for understanding how to grow a sustainable enterprise.
Design management for a social enterprise is a human-centric process that aligns design practice and business strategy in the sustainable creation of value for business stakeholders, customers and the environment through strategy, tactics and implementation.
The Business Ecology Model identifies and visually represents how value is determined in an organization. The components of the Business Ecology Model outline how an organization establishes, cultivates and grows its business throughout the product life cycle. Recommendations for how design management can enable the successful development and launch of products are identified in four categories: managing, generating, capturing and measuring value, as detailed on the following pages.
SEED – This is the purpose, mission, vision, values and leadership of an organization. The seed represents the starting point, or the foundation for the organization. It distinguishes the social enterprise from a company that began based on a single product or service concept. The seed, or purpose and values, of an organization provides the filter to create a clear, focused and authentic message to consumers and organizational stakeholders. Purpose|value|mission-centric organizations stay relevant to their customers by staying true to their fundamental principles and consistently communicating those principles to constituents and stakeholders.
BASE – This is the operational anchor point for an organization—where all managerial functions are tied to—consisting of its day-to-day legal, human resources, development, logistics, marketing, business plan and finance activities. All activities and operations start here with managing the direction, growth and resources of an organization to focus around the seed. This base harnesses the work of employees throughout both the external and internal operations in service to the seed.
The influence of design management (DM) starts with an organization’s leadership. Input from DM at the base of the tree affects how leaders use human-centric approaches to reinforce the people-planet-profit perspective, visualization, business model mapping, collaborative brainstorming and clarification of goals & objectives.
ROOTS – Supporting all the work of the organization, the roots include the internal partner network of producers and suppliers, behind the scenes operations, procurement and the supply chain. The roots connect and initiate the process of marshalling, transforming and repurposing technical, natural and financial assets (or nutrients).
TRUNK – This is where the design, development and logistics use the root network (procurement) to direct and transform natural assets and materials through production to become the products and services offered to consumers. The base directs this process by which unrefined components, materials and assets become valuable objects and services that consumers want to purchase. The trunk is the innovation and development process in which most design functions are involved in generating value.
Design management is most evident in the process and implementation of design deliverables, exhibited in the trunk. The human-centric component of design management drives the understanding of the consumer and community needs, with a focus on overcoming assumptions about the people whom design serves. The principles of DM help the organization to understand the customer through process, SWOT analysis, focus groups, customer experience, mapping, audits and segmentation. Design management’s role of framing design problems and creating solutions, lives in the core of the organization’s trunk.
BRANCHES – These are the external channels—including the marketing and sales network—which the organization uses to reach its customers.
LEAVES – Brand touch points, or leaves, include the organization’s marketing communications and customer service. All the leaves combine to create consumer perception.
FRUIT – The fruit is the actual product or service that is offered to the end consumer. All steps leading up to this point support the process, development, people, vision and values of the organization that created and produced the product.
A person’s experience across the scope of products, brand touch points, customer service, distribution channels and network influences, helps to define an organization’s value proposition.
SOIL –This consists of the technical, natural and financial capital and assets (or nutrients, in our metaphor) that an organization uses in the process of developing its products and services. These resources sustain growth and prosperity, while dictating the fixed costs of production and operations.
WASTE – Whether it is the carbon emissions generated or energy consumed in producing and transporting a product to retail, or the materials, recycling and life cycle of the actual product, waste is the consequence of production or what remains after a product is created and sold. A sustainable organization does what it can to minimize waste, designing and developing products in a way that avoids harming the environment in which products are used, and that allows the exhausted product to be absorbed by other systems or services, becoming part of the nutrient-providing soil of the organization.
HABITAT (sky) – All of elements defined above determine the type of tree that an organization is. Organizations thrive or wither depending on the environments in which they exist. An organization’s habitat consists of the external financial, market, social and environmental forces that influence its growth and health. Just as certain trees survive in different climates around the world, organizations that have unique attributes and competencies allow them to survive in challenging and evolving environments.
PEOPLE/CONSUMERS – Ultimately, it is people who purchase, use and determine the perceived and intangible value of an organization’s products or services. Additionally, a firm’s human capital (people) and the natural resources (planet) it consumes to generate value (profit | prosperity) are the lifeblood of an organization.
Viewing an organization through the lens of the Business Ecology Model encourages the visualization of the product development process as a non-linear system. Distinct from a tree in nature, business leaders and designers have the ability to modify their tree’s DNA throughout its life cycle. They can adjust the process by which products are designed and developed and even vary their product, or fruit, offering. Organizations are often strong in one area and not in others, which creates barriers to achieving their goals. It is important to retain a balance, as demonstrated in a Business Ecology Model, and to remain aligned with the organization’s values, vision and mission in order to recognize when it is time for some ‘pruning’. When design and business assets are integrated with fluidity into the strategy, process and practice of an organization, there exists vast potential for social entrepreneurs to produce both innovative market-based and non-profit solutions that meet the complex challenges of our world, while bringing prosperity to those they serve.
About the Author:
Andrew Skurdal, Lydia Hummel, Leigh Douglass and Laura Brandmeier developed the Business Ecology Model as part of their senior thesis presented in April 2009. Andrew is a product designer and strategist. Lydia is a design management senior director for COACH. Leigh specializes in sustainable textile design and Laura is a designer specializing in hospitality interiors and branding.