Why is a Business Model Important for Creating Impact?

March 24, 2017

This blog was written by Isaac Jeffries, an associate of TDi.

Think about your favourite brands. What made you a fan of their work? Was it the way they went the extra mile to delight you? How their pricing structure saved you some money? How they solved a pain point? Maybe they created positive social impact?

The fact is, every successful business you can think of runs on the back of a well-designed business model. This applies to every type of organisation – including charities, social enterprises and internal teams within larger companies.

What do we mean by a Business Model?

We’re describing how your company can constantly remain Desirable, Feasible and Viable.

These are the Three Lenses of Innovation as coined by IDEO, and every good business needs to exist at the centre of the diagram. We call them Lenses, because they’re a way of examining one aspect of your business. Each lens will highlight different strengths and weaknesses, and by looking at all three, we can create strong ideas that make money.

Desirability is about understanding your customer, what motivates them, how they engage with you and what makes/breaks a purchase decision.

We need to be desirable to our customer, or else we’ll have no sales.

Feasibility is about how you make everything happen behind the scenes. This includes hiring the right people, using the right tools, working with the right partners, and focusing on the right set of activities.

We need to run in a way that’s constantly feasible, or else we’ll implode.

Viability is about the dollars; how many we earn and how many we spend. No matter your legal structure, you’ll need a surplus to survive –there has to be some money left over at the end of the day.

We need to be viable, or else we’ll go bankrupt.

You’ll probably find it easy to tick off two of the three. That third one is the killer, and it can’t be ignored.

 

“A Business Model is an elegant expression of how all parts of your business work together for success”

— Paul Steele, co-Founder of TDi

 

Intent

Before we dive into the business model design process, we want to explicitly describe our intent, so that we can then design a business model that can deliver on that mission.

In other words: Why do you want to start this business?

Or if you’re already up and running: Why does your business exist?


J.P. Morgan famously said that behind every decision are two reasons – the good one and the real one. Let’s be frank about the real reasons. What factors are driving your decisions?

Is it about making money?

Is it about creating change?

Is it about building your dream job?

Is it about building an empire?

Is it about a decision made by your board?

Is it about building something you’re proud of?


This isn’t some cliché mission statement; rather it’s a simple description about why you’re building this business.

That way, we know what elements are up for discussion, and which are untouchable.

 

Here are some examples we often hear at TDi from impact-driven businesses:

“We want to create stable lives for young people, which comes from stable jobs and stable relationships”
“We want to create a cash cow that provides $100k of surplus to fund our charity”
“To change the way people think about the clothes they buy”
“To build a job that provides me with freedom and excitement”
“To prevent waste from ending up in landfill”
“To fulfil the Christian Mission, and spread God’s word”
“To create new business units that ensure (our organisation’s) longevity”

None of them say “To create a cool bar on High St that sells $18 cocktails” or “To sell minimalist mid-priced Swiss watches online”

They might each be a great how, but not a clear enough why.


This process helps everyone understand which elements are flexible – the things that we can happily change if the idea doesn’t look like it will work.

With this knowledge, we can design a business model that complements and delivers on our intent, whilst remaining open minded about which customers we serve, what we offer them, and how they pay us.

The Canvas

Our idea needs to sit at the heart of these three lenses. Designing a business like this is tough, and it will take a fair few goes to get it right. That’s what is so good about a canvas – it’s disposable, it’s free and it’s quick to do. We can create an idea, test it, and then fix any weaknesses. Nine boxes sound like a lot, however these are simply better ways of describing our three lenses.

Desirability is explored through Customer Segments, Customer Relationships, Channels and Value Proposition.

Feasibility is explored through Key Resources, Key Activities and Key Partners.

Viability is explored through Cost Structure and Revenue Streams.

In the next part of this series, we’ll look at each box of the canvas, and get you through your first iteration.


Isaac was TDi’s first ever employee, and has worked with over 180 impactful businesses around the world. He’s currently designing and building social enterprises in India, Papua New Guinea and Indonesia. He writes at isaacjeffries.com

Spread the love

Acknowledging Country: A new way to connect mindfully with an important practice

We recently engaged YARN Australia for a series of team workshops on storytelling, focussed on creating relationships and intentional connections between First Nations Australians and settlers. We invite you into our world as we share a practice from these workshops, and gratefully acknowledge the land we call home.

Kylie-Lee Bradford: Forging New Paths for First Nations Business

We recently welcomed Kylie to the TDi team. Kylie brings a wealth of experience in entrepreneurship as well as rich heritage and story from her Kakadu roots. Kylie is passionate about opening up opportunities for First Nations business to support and give back to...

Don’t Underestimate the Impact of Finance

by Isaac Jeffries, Senior Consultant     I recently had coffee with a university student, who is passionate about social impact but unsure about how to get a job in the industry. She’s studying maths and economics, and surprised me with this pearler of a...

Why we’ve switched to Bank Australia

  by Anthea Smits, CEO     There's been excitement around TDi this month – we are now officially a customer with Bank Australia! Why the change? When I first started to think about impact investing many years ago, a dear friend and mentor challenged me to...

9 Mindsets of my Favourite Difference Makers

TDi Senior Consultant Isaac Jeffries shares the philosophies and habits that are the hallmarks of his favourite difference-makers.

This is a concrete list of practices and mindsets for working in community, and maintaining connection to people without burning out or burning others.

Bilum: The Power of Story to Drive Inclusive Economic Growth

by Annie Smits, TDi CEO   In May this year we attended the first official public screening of The Bilum Story, hosted by the AUS-PNG Network at The Lowy Institute in Sydney. Before the screening, I introduced the film to a crowded room, by bringing to the fore a...

Why We Need More Coaches and Fewer ‘Experts’ in International Development

 By Kate Wilson, TDi Associate   An intuitive mindset coach and mentor, Kate's insight and expertise is so valuable to our team – we hope it will be for you too. This post was originally published on Kate's website, Resources Reimagined and explores the vital...

Reconciliation Week 2022: Wrestling with our role in the Indigenous Business Sector

Anna Moegerlein, Deputy CEO, TDi In light of National Reconciliation Week, TDi’s Deputy CEO Anna shares some of the unfolding story around our work in the Indigenous Business sector: What are the challenges we are wrestling with as an organisation, what are our...

Introducing: Accelerate with IBA 2022 Cohort

Our 'Accelerate with IBA' Showcase on April 7 was a great success. It's been an incredible six-month journey as we partnered with Indigenous Business Australia once again to equip a new cohort of business owners to grow, learn new skills, and explore their social...

Meeting Uncertainty and Crisis with Curiosity

Anthea Smits, TDi CEO   I’m going to be honest; I had a rough start to 2022.   We endured a bout of coronavirus in January, followed by a series of personal crises. Each of these would have been manageable on their own, but one after the other, at a time when...