How might we create a business model where D.S.C. can grow into a lean & profitable swimmer lifestyle company?

 

Course: Business Models and Stakeholders - MBA in Design Strategy, CCA

Instructor: Maaike Doyer, CFO at Business Models Inc

Client: D.S.C., a two-person startup in San Francisco, CA

Role:

I worked on a team with three classmates. We took turns leading the team and leading facilitation with our clients. It was a highly collaborative project. I took the lead on developing several business models, facilitating the design criteria canvas, evaluating the problem-solution fit, and composing our presentations.

CHALLENGE

Design a business model so that in the next five years, the D.S.C. will grow into a profitable, lean business that sells anti-chlorine products through a monthly subscription.

Assess D.S.C.'s existing model to validate the target customers (active swimmers) would want to purchase anti-chlorine products in the format of a monthly subscription purchased online. Come up with additional business model options.

UNDERSTAND

Tools/Skills:

Research

Business Model Innovation

Business Model Canvas

Vision Canvas

Context Canvas

Design Criteria Canvas

Trigger Questions

MoSCoW Method

Freshwatching

Yellow Hat 

Design Thinking

Facilitation

Problem/Solution Fit

Client Management

 
 

Research Methods

  • Primary Research

    • Interviews

    • Intercepts

    • Surveys

  • Secondary Research

The main pain-point our client addressed in their existing business model is the chlorine smell swimmers are left with on their hair and skin after swimming. They did not conduct primary research to understand if their product was desired by swimmers.

 

We dove (no pun intended) right into understanding the target customers (active swimmers) and their body-care preferences. We conducted primary and secondary research to understand swimmers, their needs, and how they felt about anti-chlorine shampoo. We surveyed and interviewed swimmers, in addition to observing swimmer behavior at a public pool. We wanted to understand how big the problem was to assess the problem/solution fit before we got into designing business models. In addition, we researched the Dollar Beard Club because our clients were inspired to start their business based on their business model, marketing tactics, and success.

Initial Survey

To understand swimmers’ attitudes towards and use of anti-chlorine body products, we
surveyed 55 active swimmers.

Initial Survey Findings

 

Key Finding:

Only 7% of respondents use anti-chlorine shampoo and our client came to us with a business plan based on a subscription for anti-chlorine shampoo. 

Context Canvas

To better understand the trends around swimmers and swimming, we completed the Context Canvas. We looked into trends including swimming and triathlon demographics, pool chemistry, pool access, sport participation, shopping behavior for personal care products and
more. We assessed the opportunities and threats to swimming and to the DSC business model.

 

Key Finding:

Only 7% of respondents use anti-chlorine shampoo and our client came to us with a business plan based on a subscription for anti-chlorine shampoo. 

Given this information, and the information gathered through interviews, we began to ideate different business models and markets that might be a better fit for D.S.C.

 

 

IDEATE

Freshwatching

We went through a freshwatching session where each teammate came up with over 50 ideas. We then clustered our ideas and made a list of the most exciting business model concepts. Freshwatching is an ideation method by which you mix and match (or overlay) business models from other companies, often totally outside of your business or industry, with your own business model to see what you can come up with. 

When ideating as a team, we looked at who various customer segments such as age, gender, competitive level, independent swimmer, water pollo player, triathletes, swim instructors, casual swimmer, swimmers’ parents, and swimmers’ significant other. We thought about swimmer’s needs as well including body care, lifestyle, community, accessories, image, and money. We thought of many possibilities of what the different values of the company could be and how we could modify the original business model canvas or create our own. 

Yellow Hat + Trigger Questions

Yellow Hat is having an optimistic, growth mindset and thinking of all the possibilities. The key to "what if" Trigger Questions is to come up with a list of questions that challenges what you do today. The combination of the two tools leads to outside-the-box thinking.

We gave our clients post-it notes and every 30 seconds we asked probing questions that reframe the circumstances and trigger new ideas. Our clients successfully brainstormed a number of new ideas and we clustered their ideas into groups and noted the themes that emerged.

Our clients were pretty set in their original business model so taking them through Yellow Hat and Trigger Questions was important. I thought if we all wore yellow hats, the fun of it would help open their minds to new possibilities... and it worked!

 

Client

 

This was a pivotal meeting because this way of provoking fresh ideas opened up possibilities and gave our clients a new perspective. They switched their mindset and became open to ideas beyond their original business model.

 

Design Criteria

I facilitated a session with our clients to establish their design criteria that would act like a north star for decision-making. I led them through the MoSCoW Method Design Canvas to identify what must, should, could, and won’t be a part of the D.S.C. business model. Understanding their design criteria helped us make better decisions aligned with their goals. The client’s won’t criteria let us know that we shouldn’t pursue some of the more radical high-tech ideas we had. Our final recommendations would be based on the must criteria of selling high quality shampoo and conditioner as a lean company.

 

Yellow Hat Trigger Questions
What if you only sold it offline?
What if you only sold 1 chlorine-related product?
What if you offered it for free?
What if you used a different subscription model?
What if you offered a freemium model?
What if your offering was b2b only?
What if you could eliminate fixed cost?
What if you did the bait and hook model?
What if you expanded your target audience to include all athletes?

What would Michael Phelps do?

What if swimmers enjoy the chlorine smell?

What if you only sold to triathletes? 

 


Who else may need your products?
What if you decided to be a wearable business?
What if you were not a lean business? What would you offer then?
What if your #1 goal was delighting customers? 
What if all pools became salt water pools?
What if you partnered with athletic facilities?
What if you had a huge pile of cash to spend?
What if DSC was an actual club (i.e. a physical space and/or membership)?

 

 

PROTOTYPE

 

With established design criteria we set out to investigate over a dozen business models. We worked in pairs to map them on the Business Model Canvas. We did a SWOT analysis of the the strengths, weaknesses, opportunities, and threats of each business model we put together, and our analysis informed which models we wanted to move forward with.

The business models include: 

Original D.S.C. Model

Class pass for pools

B2B

Gamification / Wearable

Non-lean

Parents as Target

Kiosk / Vending Machine

Freemium

Aspirational Swimmer Kit

Birchbox for Athletes

 

We narrowed down the list of business models with our client, using the design criteria to guide our decisions, and we pushed forward with three models: an anti-chlorine subscription service targeted at swimmers, an anti-chlorine subscription service targeted at parents, and lastly an aspirational swimmer starter kit since swimming is the number one aspirational sport.

VALIDATE

 

 

With the built out business models, we wanted to test what we found most risky and vital for the business models to be successful. We identified our main assumptions, formed hypotheses, and outlined success metrics. To (in)validate our assumptions, we ran a second set of surveys and interviews with the target customer segments.

 

Key Assumptions + Findings


Assumption:

Swimmers want shampoo that is branded as anti-chlorine shampoo.

Findings:


Analysis:

We recommend D.S.C. market their shampoo based on hydration, scent, and affordability because those are the factors swimmers care about when purchasing shampoo.


Analysis:

We recommend targeting parents of swimmers before swimmers because they are more willing than swimmers, to buy body-care products online.

 


Assumption:

Most swimmers and parents of swimmers want to purchase body-care products online.

Findings:


Assumption:

Parents want to protect their children from the effects of chlorine.

 

Findings:


Analysis:

We recommend D.S.C. market anti-chlorine related products to parents as a significant proportion of them notice how chlorine negatively affects their children's hair and skin.

 


Assumption:

Swimmers and parents of swimmers prefer a subscription service for anti-chlorine shampoo as opposed to another method of purchase.

Findings:


Analysis:

We recommend targeting parents of swimmers before swimmers because they are more willing than swimmers, to buy body-care products through an online subscription service.

 


Assumption:

Lack of gear is the reason aspirational swimmers have not started swimming.

Findings:


Analysis:

We recommend D.S.C. does not move forward with a swim kit targeting aspirational swimmers as this does not adequately meet the need of the customer segment.

SOLUTION

 

Based on our analysis, we recommended that D.S.C. pivot and adopt a business model focusing on selling anti-chlorine products to parents of swimmers in a monthly subscription model through an online store. We recommended marketing their products as high-quality swim products that protect to appeal to parents looking to care and protect their children. The Parents Business Model has the potential to create on-going, long-term customer relationships through serving swimmers as children and continuing with them through adulthood.

The following are reasons to move to the Parents Business Model:

  • Parents are more likely to subscribe to online services than average swimmers

  • The value proposition of caring for and protecting children’s hair and body is strong

  • Parents are a more clearly defined customer segment and therefore easier to tailor marketing strategy and tactics towards

  • Introducing kids to anti-chlorine products while young could create life-long customers

  • It's a less crowded market

  • Parents are looking for high quality products

Parent Business Model:

Go-to-Market Strategy:
D.S.C. should create a strong branding strategy to build customer interest. We suggest creating a website and using a Kickstarter with a video that catches parents’ interest to drive pre-sales. Concurrent to driving pre-sales, D.S.C. should develop and A/B test branding, packaging, messaging, and the official website. We advise producing some samples and forging partnerships to reach target customers. Our suggestions also take into account the operations and product development needed to launch the business.

IMPACT

When we presented this shift in business model to our clients, they were very receptive and said they plan to follow our recommendations. As of December 2017, they still hadn't launched.