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For years, a business model has been described as a method for making money. It’s true that making money is a key trait of a healthy business, but making money is just half the equation.
Take me for example. For the last 13 years, I’ve been giving half of my design services away for free to nonprofit organizations in need. Surprisingly this “give half” ethos has not only allowed me to survive financially, it’s also made it possible for me to grow a business, hire employees, and do work with hundreds of clients and communities across the globe.
So what on earth is a business model?
After studying thousands of organizations, I’ve learned that the ideal business model is designed to balance approaches to generating and sustaining both impact and revenue.
An Impact Model is a sustainable way of making impact in the world. Impact is very broad. This can be social impact, environmental impact, or even personal impact. A Revenue Model is a sustainable way of generating income to support your venture.
If you only have an impact model, you’ll feel fulfilled, but that sense of purpose will be short-lived due to financial constraints. On the other end, if you only have a revenue model, you make make some money, but that will be short-lived as well due to a heightened chance of burnout thanks to a lack of fulfillment in your work. By balancing impact and revenue, your venture can support and fulfill you. You can learn more about the various impact and revenue models that are trending in the market by reviewing the glossary available in the Models of Impact toolkit.
Aside from impact and revenue, your business model should also be inspired by other factors such as your core competencies, interests, resources, etc.
Let’s take a look at an example of a successful business model in-action.
Located in Florida, Rising Tide Car Wash is a social enterprise that primarily employs people with autism. Cofounder John D’Eri, the father of a son with autism, learned that hundreds of thousands of people with autism would soon come of age to enter the workforce, but would have a difficult time obtaining a job. Inspired by his own son, and the idea that autism could be re-framed as a “competitive advantage,” the Rising Tide Car Wash team learned that the skill sets and discipline required to wash cars shared many of the key skills a person with autism has.
Impact Model: Rising Tide Car Wash is creating impact by providing jobs for people with autism. This allows the community they serve to gain financial independence, skills, and confidence.
Revenue Model: Rising Tide Car Wash is generating revenue by making a range of car wash services available in exchange for a fee that is paid by the customer.
Other Factors: Rising Tide Car Wash is leveraging the core competencies of its staff by offering a service that depends upon a core set of skills that come natural to people with autism.
Part of what makes Rising Tide Car Wash such an incredible example is the fact that the founders have a direct relationship and experience with their mission. As a result, authenticity in your business model and key offering is key for building a brand.
When social impact became more trendy in business, consumers started to become more critical. When a business engages in a social action, the intentions can be perceived as inauthentic if the activity lacks clear alignment with the brand or core competency of the business.
Take the recent Pepsi commercial starring Kendall Jenner for example. The commercial was staged at a demonstration that resembled a Black Lives Matter protest. Upon handing a police officer a Pepsi, Kendall Jenner single-handedly put an end to the tension between the demonstrators and the police officers. The campaign was called “tone-deaf” and “insensitive,” ultimately leading to the commercial being pulled from the air.
A misalignment like this, between the social action and the brand impacts the trust between a business and its customers. Alternatively, when the brand and the social action are perfectly aligned, the value of the brand is elevated, and trust is established with the customer.
Let’s take a look at an example of a business that aligns its brand/core competency with its social action.
Meathead Movers is a moving company that employs student athletes. The company also donates a percentage of its moves to benefit victims of domestic violence. The core competency of meathead movers is, quite literally, moving things for people. When considering an authentic social action for the company, Meathead Movers successfully aligns their core competencies to those who could benefit greatly from their offering.
Laurence D. Fink, the chief executive of BlackRock announced this year, that contributing to society must become the new normal for businesses. I’d like to add that this responsibility to impact generation is not something designers are off the hook for. Designers have a unique ability to give voice to the voiceless, create platforms for co-creation, and uncover problems worth solving. When designing your own business model, consider your core competencies, and think to yourself—who out there needs these skills? I promise you that, at any given moment, someone, somewhere, needs you.