The Concepturealize™ methodology was evaluated, according to the design-science approach (Hevner & Park, 2004), by use of descriptive evaluation through informed argument (by building upon existing artefacts with demonstrated utility), by demonstrating utility through a detailed scenario, and by analytical evaluation through examination of artefact structure and elements for static qualities (comprehensiveness and applicability to the problem, integrity of the toolset, familiarity of individual tools to target users, and ease of use).
The imagined scenario presented demonstrates the utility of Concepturealize™ by following a fictitious practitioner through the complete methodology. The practitioner should be considered as a new entrepreneur at the very beginning of conceiving a new startup venture, not having identified a problem to address. The location and industry of the startup, together with the background and core-skills of the practitioner, are intentionally undefined to aid demonstration of the generality of the methodology, although the practitioner having a working knowledge of DT and LS practices is assumed.
Step 0: Start. The process begins at Step 0 with the purpose of identifying ‘Wicked Problems’. The practitioner starts by empathising with people by observing and engaging with them to try to understand them on a psychological and emotional level. The practitioner uses immersion and observation and realises that people appear to dislike getting wet when it rains. They then use interviews to discover the reasons that people dislike getting wet include an aversion to feeling cold and not wanting to present a dishevelled appearance. Next, the practitioner defines the under-served needs that they have uncovered through the empathic understanding, they define the big user problem that needs to be solved, using tools such as 5-whys. In this scenario, the practitioner discovers that people would prefer to stay indoors when it is raining but often need to go outdoors, despite the rain, to travel to work or run errands. Finally, they ideate to create a ‘Big Idea’ to address the under-served needs, using brainstorming and mind-mapping techniques.
Step 1: Observation. Following step 0, the practitioner enters Step 1. Here, the purpose is to discover the existence of a potential market for the big idea. Step 1 is a cyclical sub-process that starts with a ‘big idea prototype’—simply a clear and concise description of the big idea. In this scenario, the big idea is ‘a lightweight portable roof that the user can wear upon their head to keep themselves dry’. The practitioner tests the big idea by describing it to potential customers and eliciting feedback through surveys or other forms of quantitative research. The practitioner discovers that many people do not feel that they would use such a contraption.
Next, the practitioner develops deeper understanding by building on the quantitative data to understand the implicit needs of the potential customers, by methods such as interviews. In this scenario, our practitioner learns that many people would feel self-conscious about their appearance when wearing such a device upon their heads, while others are only concerned about the inconvenience when negotiating tight spaces, such as alleyways. The practitioner uses the insights they gain to generate a needs statement and customer profiles, and to segment users into groups, based on those needs (in this scenario, the people that give more importance to appearance, and those that give more importance to utility and convenience). The practitioner must then use the newly acquired better understanding of the customers and their needs to improve the big idea before retesting and developing even greater understanding, iterating until the big idea can no longer be significantly improved. At this point, the practitioner moves to step 2.
Step 2: Customer discovery. Using the needs statement and profiles generated in Step 1, the practitioner generates a simple prototype to allow target customer representatives to interact with the big idea, this is a simple paper-prototype or a ‘Wizard of Oz’ prototype,Footnote 5 perhaps a mock-up of an application or an analogous representation of a product idea. In this case, the prototype is a plastic dustbin lid affixed to an open-faced motorcycle helmet. The prototype is tested within each segment and used to gain insight of the implicit ‘pains and gains’ in relation to the big idea. Our practitioner discovers that the inconvenience of wearing such a thing on one’s head outweighs the pains the come from being wet from the rain.
The following sub-step is to understand the customers—to gain a deeper understanding of the importance of the pains and gains (i.e. not just to know the pains or gains exist, but to understand why they exist and how important they are to the customer). The insights gathered from this sub-step are then used to define and prioritise the pains and gains for each segment for use in improving the prototype or testing method to be used in the next iteration of the cycle. Our practitioner begins to understand that an important relevant pain for older people is the fear of becoming ill from spending time in wet clothes—however, this same group of people are frequently concerned with the risk of injury caused by a gust of wind catching the headwear whilst it is in use—if this risk could be eliminated, they would use the product.
Our practitioner iterates on the prototype, eventually affixing the dustbin lid to the end of a rod so that it may be held above the head with one hand, rather than it being attached to the user’s head. At this point, user feedback indicates that the device suitably relieves the pain associated with being wet from the rain. Further feedback indicates that some users that live in drier climates perceive an additional gain from using the product to shade themselves from the sun. Our practitioner further discovers that, in general, users require the device to be lightweight and to be foldable for easy handling and storage when not in use. One user suggests that the device be fitted with lighting to assist when walking at night.
Once improvements can no longer be realised, and assuming the pains and gains have been fully defined as significant enough to warrant further exploration, the practitioner moves to step 3. If the pains and gains, in relation to the big idea, are defined as not being significant enough to warrant further exploration, the practitioner should ‘pivot’ by returning to Step 0 to come up with a new big idea. In this scenario, the pains and gains are defined as significant, so the practitioner moves to Step 3.
Step 3: Value proposition. This step begins with the ‘Value Proposition Canvas’ (Osterwalder et al., 2014) as the prototype. Our practitioner uses the canvas to test the problem–solution fit—to align the pain relievers and gain creators from the big idea with the pains and gains observed in Steps 1 and 2.
Our practitioner then begins to understand the wider perception of value by using tools such as day-in-the-life exercises, surveys, immersion, observation, and interviews to understand how a wider sample of potential customers perceive value in the big idea; and fully defines the pain relievers and gain creators and how they align with customer needs. Finally, the practitioner iterates the value proposition by further ideation and repetition of the previous sub-steps. Once the pain relievers and gain creators provided by the big idea have been fully defined, the practitioner moves on to Step 4, or returns to Step 0 should it not be possible to align the value proposition with the needs of the customer. In this scenario, our practitioner defines that the gain provided by built-in lighting is not significant for most users, so the feature is dropped from the value proposition. The lightweight and foldable properties of the product are significant so are retained. The pain reducers and gain creators provided by the product are now aligned with the most significant pains and gains of the customer, so our practitioner moves to Step 4.
Step 4: Relationships and channels. Step 4 covers the channels through which the customers may be reached and the types of relationships the business will have with them. This step follows a similar five sub-step cycle, making use of tools such as web analytics, A/B split testing,Footnote 6 industry data, interviews with channel partners, surveys, and interviews with customers to define the size of the potential market and reach potential (Total Addressable Market (TAM), Serviceable Addressable Market (SAM), Serviceable Obtainable Market (SOM)) as well as a communication and engagement strategy. The practitioner continues to iterate this step until no further improvement is realised before moving to Step 5. Here, our practitioner defines that the market size is attractive, and that homeware, clothing and sporting goods retailers would stock such a product. Further, our practitioner iteratively develops their initial marketing strategy, opting to start with online sales and to later develop a market through high street retailers.
Note that, in contrast to the Business Model Canvas (Osterwalder & Pigneur, 2010), where Customer Relationships and Channels are approached as separate blocks, Concepturealize™ encourages the practitioner to consider them together. A particular channel may improve, or indeed prohibit, a particular relationship type (and a particular relationship type may improve or prohibit a particular channel)—considering both elements in unison enhances the fit between them.
Step 5: Revenue streams. Step 5 exists to understand the required and expected revenue streams and the impact of their variation on the deliverability of the value proposition. This step uses tools such as innovation accounting (Ries, 2011), sales forecasting, income statement projections, and cash flow forecasting, together with interviews with channel partners, competitor research and interviews with customers, to understand and define revenue metrics and risks. Again, a five sub-step cyclical process is used here. Once improvement through iteration has been exhausted, the practitioner should move to Step 6. Our practitioner now understands the customers’ willingness to pay, the maximum acceptable retail price and the expected sales margin from the retailers.
Step 6: Key activities. At Step 6, the practitioner should come to understand, and be able to define, the activities required to deliver the value proposition. The sub-steps are to prototype the activity plan; test the ability of the identified activities to deliver the value proposition; understand where there are shortfalls or wasted activities; define a full scope of activities, with a project plan or timeline; and then exhaust the iteration cycle before moving on. If it is found that the activities required to deliver the value proposition are not feasible, the practitioner should pivot by returning to Step 0 to come up with a new big idea for which a feasible value proposition could be devised. Otherwise, they should move to Step 7. In this scenario, our practitioner iterates though the activity plan until they have fully defined the main activities of product design and engineering, production, warehousing, marketing, and sales, as well as all of the foreseeable supporting activities including staffing, accounting, contract management, etc.
Step 7: Partners and resources. Now that the practitioner understands the activities that mut be conducted in order to deliver the value proposition, they may begin to understand what resources and partnerships they will need to complete the activities. This is Step 7. The practitioner conducts risk analyses, and strengths, weaknesses, opportunities, and threats (SWOT) analyses, in the context of the project plan and activity plan from Step 6, to understand how best to organise the resources and which partnerships to best pursue in order to be able to deliver the value proposition. Here our practitioner again iterates through the activity plan, allocating resources or partners, as appropriate. They decide to outsource all activities, except for managing the startup, to external companies or consultants.
Note that, in contrast to the Business Model Canvas (Osterwalder & Pigneur, 2010), where Key Partners and Key Resources are approached as separate blocks, Concepturealize™ encourages the practitioner to combine them. Each activity defined in Step 6 must be performed either by a partner or by a resource, else it is not performed at all. Giving consideration to partners and resources, in unity, decreases the chances of an activity not being covered by either.
Step 8: Cost structure. With an understanding of the revenue model and the activities that must be conducted, together with an understanding of who will conduct them (i.e. which activities are handled by internal resources, and which are handled by partners), the practitioner may move to Step 8. By use of innovation accounting techniques and traditional financial forecasting and modelling methods, the practitioner should build a full picture of the expected cost structure. Industry data, enquiries with suppliers and competitor research should be used to inform the model, which is then used to identify and understand the reliability of the assumptions made and the impact of any variation. Once iterative improvement of the cost structure ceases to yield results, this step outputs cost metrics and completes the business model and the practitioner may move to Step 9 (Implementation). If, however, it is found that the cost of the required activities makes the cost model non-viable, the practitioner should pivot by returning to Step 6, where they will redefine the activities required to deliver the value proposition, and subsequently, the partnerships and resources required to conduct the activities. If the costs of delivering the value proposition are still not viable, the practitioner should pivot by returning to Step 0 (via Step 6) and repeat all steps to discover a viable way to create value.
In this scenario, our practitioner learns that it is not feasible to deliver the value proposition within the available budget. As such they return to Step 7 and reiterate through the activity plan, removing warehousing, instead opting for just-in-time production. The practitioner carries the revised activity plan through Step 8, redefining product design as an activity to be conducted by an internal resource, opting to recruit an experienced product manager to the team. Finally, our practitioner reiterates through Step 8. It is now feasible to deliver the value proposition within the available budget, so they move to Step 9.
Step 9: Implement. Now that our practitioner has followed steps 0 to 8 and uncovered a viable way to create value, developed a deep understanding of the value proposition, the target customers and how to reach and serve them, together with the expected revenue and costs, they develop and deploy the product that will deliver the value proposition, within the parameters of the business model.
After deployment, the practitioner returns to Step 3 and retests the problem–solution fit and understands how the customers perception of value has changed since the implementation of the product—following through all subsequent steps, looking to continually add value at each cycle.
The methodology was presented to target users (without personal connections to the author) within three organisation types, who were each asked to provide critical feedback. The target users’ profiles were the CEO and founder of a profitable, post-money startup (user 1); a head of entrepreneurship and startup support, and business mentor, at a national governmental economic development agency (user 2); and an innovation mentor and professor at a state university (user 3). All three agreed that Concepturealize™ offers value to entrepreneurs, with user 1 commenting that “[Concepturealize™] touches all the key aspects to reflect about when implementing business models and assure that they bring the right revenue stream”, but that “finding a good fit problem–solution–value proposition-business model sometimes does not suffice, as it is necessary to educate the market and promote, which consume time and money and that is not considered in [Concepturealize™]”. To address this, further detail was added to the description, particularly around ‘Step 4: Relationships and Channels’ and ‘Step 8: Cost Structure’ to enhance clarity around how marketing and promotion form part of the BMD process.
User 2 reported that “[Concepturealize™] presents a logical framework that can give a constructive and progressive format to something which is abstract and surrounded by unknowns” and that “it is well broken-down and allows for identifiable steps for each stage; it allocates each phase its respective degree of importance and also allows for the new entrepreneur to [pivot], if necessary”.
User 3 reported that they found Concepturealize™ to be a new methodology which offers a “synergistic process, clear criteria, and clear relationships”.
Suggestions for improvement included adding elements based on the type of business (for example business-to-business, business-to-consumer, business-to-business-to-consumer, etc.); and further development of the model into a ‘virtual assistant’ or ‘chat bot’ that could provide hints and warnings to the practitioner.
Other feedback included a request for the inclusion of a version of the Concepturealize™ illustrated flow without the BM canvas underlay, as the respondent felt that the methodology overlayed on the BM canvas may ‘scare’ new users. This feedback was actioned by providing the version of the illustration shown as Fig. 6.