Fraser, H. M. (2012).

Design works: How to tackle your toughest innovation challenges

through business design: University of Toronto Press.

VALUE EXCHANGE
Designing the delivery and exchange of value
WHY DO WE DO THIS?
To translate design elements and the sequence of events in your envisioned
experience into a value-creation exchange system among stakeholders. This
helps you synthesize and visualize how value is created and, importantly,
reveals opportunities for you and other stakeholders to make money through
revenue streams and savemoney by finding the most effective and efficient
ways to deliver your solution. This exercise will help you answer questions
like: How does the market idea get created and delivered? Who are the key
stakeholders and how is value exchanged among them? Where’s the money?
How can we be most effective and efficient with resources and expertise?

HOW CAN YOU DO THIS?

This exercise is best done in tandem with defining your Capability
Requirements and designing your strategic Activity System, as you will
ultimately need to decide what you will do internally and what you will do
through partners. You will begin to explore the financial side through this
exercise. The Reciprocity exercise (described in the next tool) broadens the
assessment of value to ensure that this is a win-win for everyone in a broader
sense, because value does not always have a clear price tag on it. An example
from the Singapore WISH project is included as a real-life illustration.

Define stakeholders and their roles. Based on the outcome of your

Capability Requirements, identify all of the relevant stakeholders who are a
part of your solution and what they uniquely bring to the delivery of your
envisioned solution. For example, in WISH, the role of the producers could be
to produce, manufacture, and co-package multiple products from various
network producers, as well as to inventory and distribute finished gift boxes.

Define the key design elements (POEMS) and how they are
delivered. This defines how the design elements get created, produced, and
delivered to the customer, including how value is created through enablers and

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influencers. For example, in WISH, customer-facing elements include various
promotional components (e.g., branding, communications, merchandising),
the flagship shop, and the WISH box itself.

Define how all parties may benefit and make money. While it is
important to define what each stakeholder contributes to value creation and
what each gets in return in the broadest sense, this exercise focuses on if and
where stakeholders make money — one of the important incentives in
business. While this is a conceptual exercise to intuitively explore the
financial exchange, you will also need to work through the specific financials
within this exchange. Reciprocity expands the definition of value to ensure
that everyone wins in these broader terms. In the WISH example, the most
obvious source of revenue is the sale of the WISH box (from which retailers
and producers benefit), but there are other partners who need to be paid in
order to create and deliver all of the necessary design components.

Visualize the exchange of value among them. Now is the time to begin
to prototype your system into one ecosystem that links stakeholders to the
delivery of the solution. Use sticky notes and large surfaces to begin to
prototype your delivery and value exchange system.

Look for additional sources of financing and revenue. While you may
already have identified the obvious ways to make money (for example,
through selling a core product or service), this is the time to look for
additional revenue streams. In the case of WISH, would others interested in
the promotion of Singapore find it beneficial to join the network and
contribute their expertise or sponsorship?

Look for efficiencies. Think of the cost of developing capabilities, as

well as the effectiveness of the value chain.In the example of WISH, utilizing
existing capacity would be the most cost-efficient approach in production and
co-packaging. While an alternative was to outsource co-packaging to a third
party, this would have added extra cost to the value chain. Also, collaboration
with others in the tourism business offered opportunities for quick and broad
access, as did distribution through existing high-traffic retailers.

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 Explore, prototype, iterate, and refine. Starting with an initial
prototype, ask yourself the following questions: Is this the most effective and
efficient way to deliver our envisioned solution? Are there other ways to go
about this, ways to do this more cost-effectively, or ways to establish other
potential streams of revenue? In the case of WISH, there are future
possibilities for capturing revenue from tourism sponsors and public
enterprises interested in promoting Singapore.

Evaluate the unique role of your enterprise. Determine how you (in
this case the Industry Association and the member producers behind
Singapore WISH) are uniquely positioned to create this solution and succeed.
Reflect on the existing capabilities and interdependent relationships, and
determine if these can be distinctly leveraged to contribute to success and
competitive advantage. In the case of Singapore WISH, the tight network of
collaborative producers that deliver authentic Singaporean treats is not
something anyone else could preempt or replicate, as it is anchored in
“authentic” Singaporean products.

TIPS
_____
Your envisioned Experience Map will be an important reference, as you will
want to preserve the intent of your envisioned solution.
_____
Your Stakeholder Map, Personas, and Needs are helpful references to ensure
that you deliver value to key stakeholders — the end user in particular.
_____
Identifying Capability Requirements and designing your future Activity
System are interrelated exercises that together will shape your strategy.
_____
This is an iterative process; stakeholders and elements can be rearranged to
reveal different models of value exchange. Using tools such as sticky notes
and an erasable whiteboard lets you quickly plot and reorganize your
visualization.
_____
Consider ways to refine the system and improve both viability and efficiency
by looking to external partners and technology. The Landscape of Players you
may have developed earlier will come in handy here. Imagine all possible

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partners who could help you deliver your new idea, and how they could
deliver and receive value.
_____
After consolidating and refining your system of Value Exchange, refer to the
tips on Reciprocity (see the next tool) to consider how best to sustain the
system.
_____

WHAT MIGHT THIS LOOK LIKE?

In the following example from Singapore WISH (figure 54), the roles of all the
stakeholders involved in developing and delivering key components of the
envisioned experience were mapped and refined to create the following
visualization. Dollar signs indicate where there is a financial benefit to
stakeholders.