We're going to dive into two very essential tools which are your key starting point for service design. And those two tools are the business canvas and the value proposition canvas. Let's get started by learning how to use the business model canvas. Now, one of the things that differentiates service design from UX
is this grounding and this essential need to take a very close look at business models and the value proposition that you're delivering. Ultimately, you really have to understand the moving parts and pieces to what amounts to not just an interface that gets launched but an entire service – an entire ecosystem that's created and activated with different channels and different touch points all working together to deliver core value to
the customer. So, the business model canvas is a tool that was developed by Osterwalder and Pigneur. And they basically created this as a way to generate conversation and dialogue as well as help you map out the business model. So, if you look at the canvas there, in the top-left corner, you've got key partners.
So, key partners are the entities that are going to help you fulfill the key activities and the key resources. Key activities are the things you really need to do in order to fulfill on this value proposition. So, it's the things that go into the day-to-day business – the essential things that have to get done. The key resources are the tools that you use to get those things done. And so, the partners are going to help those.
So, you'll start to see a cause-effect type relationship hopefully with these different aspects of the canvas. Value proposition is the thing that we think is going to create value for the customer. So, it might be a new idea; it might be a decrease in costs; it might be some value-add that the customer gets. Then we have customer relationships. Those are going to be things like customer retention and acquisition and upselling. So, "How do you *get* the customer?",
"How do you *keep* the customer?" and then "How do you *continue to add value* to the customer?". And I think that this customer relationship and the value proposition are intimately related because everything you're doing really is about retaining that customer relationship and thinking about the lifetime of the customer. So, our journey maps – as our kind of next step from this – are really going to map this out. Over here on the right, we have *customer segments*.
And in UX we think of those as *personas*. These are the targets. So, are we targeting young people? Millennials? Are we targeting seniors? Are we targeting men, women, children? – you know – who are we targeting? And then, we have the channels here. The channels are going to be how we deliver that value proposition. So, is it going to be online? Is it going to be through physical means? A combination of the two? An example of this is I just bought a gift card for my mother
to her favorite restaurant. And her favorite restaurant didn't have gift cards on the website. So, I found the site; I Googled "gift card for" this restaurant and this service came up called Giftly. So, they said yeah you can send a gift card. So, I chose the amount, I sent the gift card and sent it off, put a customized message, got to choose the style of— So, this is all the *channel* – so, Giftly completely helping you choose gift cards for someone, delivering them by email. So, that's the online channel, so they get it through an email
– for example, in this case. So, down here we have *cost structure* and the *revenue streams*. So, now we're already thinking about ROI and where the money is going to be made. So – you know – is this advertising? Is this – you know – like Facebook monetizes your data basically. They monetize your activity – getting a lot of heat for that now because the ethical nature of that and the privacy and the spying and all the sort of stuff that goes with
– with Facebook's – you know – a very difficult space that they're in right now. It makes you think that there should be an additional one here called *Sustainability*. Right – so, "How sustainable is it to the planet?" from a planetary-resource-responsibility point of view and sustainable in terms of the – you know – "Are you just making a bunch of fast money, or...?" in that example. And then, what kind of money you're going to make from it.
So, partnerships, key activities, key resources, the value proposition, relationships, channels, customer segments, cost structure, revenue streams. And – this is my own thinking is – *adding sustainability* because I think it actually is really, really relevant. If you have an MBA, a lot of this is going to be traditionally in your mind for an MBA. This is why Don Norman – the Grandfather of User-centered Design – many years ago said that
if you want to have impact in your organization, you should just get an MBA degree. I remember reading that and going "Wow!". And basically what he was talking about is understand the business model, understand the business objectives *up front*. Map that out. Now, if you're doing an MBA, the latest MBA programs have this last part here: the sustainability. If you're doing a very current degree, or a lot of MBA programs will have that.