Glossary

A

• Analog: Something that is new to you but proven elsewhere, so you can learn from others and copy what works: "We know from [X] that [Y] just works for us." Analogs make life easier, but if a project finds only analogs, there is nothing left to validate (see Hypotheses & Experiments).

• Antilog: Something that is new to you and new to the market, so you cannot learn it from anyone: "We don't know whether [X] works for us." The most important and uncertain antilogs form your test focus and turn into open questions or hypotheses (see Hypotheses & Experiments).

B

• Business Design: An agile end-to-end innovation management approach that covers the entire journey from the vision of your company to the first revenue you generate from innovation. It works best when you build something new and face many uncertainties (see Introduction).

• Business DNA: The very essence of your business model, which helps you tell a compelling story. It consists of three parts: the job(s) to get done of your primary target group, the core value of your offering and the unfair advantage of your organisation (see Business Model).

• Business Model: A future business scenario that shows on one page how you create value for customers and earn money with it. At its core sits the business DNA, which puts the customer's job to get done at the centre (see Business Model).

C

• Customer: An active participant in Business Design, not just a subject to study: customers help you build business models, products and services that actually excite them. They share insights about their lives and past experiences, test your results, give feedback and sometimes co-create (see Roles).

• Customer Investment: What customers and users give to show how committed they are to your offering – compliments don't count, because they cost nothing. Investments can be financial, like a deposit or a pre-order, time-based, like registering for a newsletter or testing a trial version, or social, like a recommendation or a testimonial (see Validating Hypotheses).

D

• Deep Dive: A short project of two to three weeks in Phase III that describes a vague idea more tangibly and collects first data, so you can evaluate it properly in the portfolio. It is not about validating the idea – that comes later (see Step 2: Deep Dive).

E

• End-to-End Innovation Process: The five phases that take you from your vision to growth, from Phase I to Phase V. It is not a straight line: you iterate within Phase IV and loop back from Phase IV to Phase I (see End-to-End Innovation Process).

• Experiment: A sequence of actions that collects data to explore an open question or test a hypothesis, built from action, measurement and timeframe: "We integrate credit card payments into our check-out process for X customers and count the usage within the next 3 weeks." When you test a hypothesis, the experiment measures against a threshold you have defined in advance (see Hypotheses & Experiments).

• Exploration: Empirical research to gain first insights in a field that is new and not yet well understood, guided by open questions instead of hypotheses: "We don't know whether…" Customer observations, interviews, case studies and experimental prototypes are typical methods (see Exploring Questions).

• External Expert: A subject-matter expert with specific knowledge that you need in certain phases of the innovation process. External experts are not part of the project team and join only the workshops where you need them – that keeps the team small (see Roles).

F

• Financial Sanity Check: A simplified P&L template that estimates revenue, costs and profit for the next five fiscal years, with the first year broken down into quarters. It is not a fully-fledged business case, but it tells you whether your business model may lead to a decent profit margin (see Financial Sanity Check).

G

• Guiding Principles: Six principles we apply in every project and stick to, even when someone tries to soften them up: Dream Big, Act Small; Customers First; Think Business, Not Product; Demo or Die; Facts Over Opinions; #GOOTFB. Each one is short enough to remember and strict enough to hurt (see Guiding Principles).

H

• Hypotheses: Testable statements about the most uncertain assumptions (antilogs) behind an idea, phrased as "We believe that…" and backed by a threshold that tells you when you are convinced. No number, no hypothesis: if you cannot quantify it yet, formulate an open question and explore it instead (see Hypotheses & Experiments).

I

• Innovation Horizon (H1–H3): A tag that describes the nature of an idea in the portfolio: incremental innovation of existing offerings (H1), new business potential connected to the core business (H2) and game changers with little connection to the core business that can disrupt it or create new markets (H3). It is a property of the idea, not an evaluation criterion – the portfolio rates ideas by distance to success and strategic fit (see Portfolio).

• Innovation Manager: The person who orchestrates the innovation management system and manages the portfolios of new ideas and innovation projects across all phases. Key tasks include initiating new projects, establishing a reporting system and gate-keeping to the C-level management (see Innovation Manager).

• Insights Matrix: A simple tool to structure the results of exploration projects or of the discover phase along two axes: weak or strong signals, and confirming or surprising insights. Surprising insights backed by strong signals get special attention, because this is where we expect the "Golden Nuggets" for new business ideas (see Insights Matrix).

K

• KPI: A key performance indicator that measures short-term progress over three to six months and shows whether current work moves you towards your objectives. Each KPI needs a number, a time window and a name, and five to seven per planning period are enough (see Measurement of Success & Progress).

L

• Leadership: The mindsets and behaviours leaders need so that people feel innovation work is wanted and supported – not just with money and resources, but with personal appreciation and protection. Leaders steer innovation work through their questions far more than through their decisions: "Which hypothesis did you falsify this week?" beats "What's the status?" (see Leadership).

• Lean Offering: The first version of a product or service on the market, with a minimal set of features that already lets you charge customers. Unlike a classic MVP, it covers your hypotheses, carries the DNA of your business model and passes one last test: "Does your mother like it?" (see Lean Offerings).

• Level of Reality: How close an experiment comes to a real buying situation: an interview offers little reality, even with a prototype, while the highest level comes when you charge your customer and money changes hands. The more customer investment you ask for, the more reality your experiment needs (see Validating Hypotheses).

M

• Maverick: A temporary team member, usually provided by Orange Hills, whose job is to stimulate radical and fresh thoughts within the project team. A maverick is optional but very helpful in a kick-off and in design workshops to push people beyond their mental boundaries and traditional patterns (see Maverick).

• MVP: Short for minimum viable product, as described in Eric Ries's book "The Lean Startup". Business Design deliberately defines its first market version differently, as a lean offering that already lets you charge customers and carries the DNA of your business model (see Lean Offerings).

N

• New Business Blueprint: The central results document of the end-to-end innovation process: it brings together everything you have worked out so far and opens Phase V by asking who takes the new business to market. It is not a reformatted proposal for decision-making – the material is the same, but the audience and the question are not (see New Business Blueprint).

O

• Objective: A long-term measure of success with a time horizon of five to ten years. Objectives are usually financial, like revenue and profit, but can also cover market share, technology leadership or sustainability goals (see Measurement of Success & Progress).

P

• Picture of the Future: Your vision of what a desirable future looks like for your customers and your organisation. It does not predict the future; it is the "North Star" for every strategic decision and the starting point for all innovation activities (see Picture of the Future).

• Playground: An "interest area" within your picture of the future: territory that is uncharted today but highly relevant for turning your vision into reality. One sentence is usually enough to define a playground, and a picture of the future typically yields nine to twelve of them (see Framing Playgrounds).

• Portfolio: A visual representation of all your ideas and their relative opportunity-to-risk ratio, plotted by distance to success and strategic fit. It is where you document and evaluate ideas and launch new projects – not a final verdict, but the right next step for each idea (see Portfolio).

• Project Charter: The agreement in which the project sponsor and the team manager set the frame of a project before it starts – no sprint without a signed charter. It comes in three variants: Project Charter "Sprint" for Phase IV, Project Charter "Exploration" for Phase II and Project Charter "Inspiration" for Phase I.

• Project Sponsor: An entrepreneurially minded leader with a business problem to solve and real power and resources, who acts as the "internal customer" of a project team. Never start a project without one (see Project Sponsor).

• Project Team: The team that drives a project and the key element of Business Design: one team manager and two to four team members, fully accountable for the results. The project sponsor, the team coach and customers work closely with it but are not part of it (see Project Team).

• Prototype: A visual and reduced representation of an idea or concept, built for a purpose: as a tool to think with or to interact with customers. You build it to learn before launch, unlike a lean offering, which customers already pay for (see Prototyping).

S

• Social Prototyping: Prototypes give people a common language, aligns different perspectives and makes hidden disagreements visible early and cheaply. Prototypes also shape the team itself – its motivation, roles, identification and fears (see Social Side of Prototyping).

• Sprint: A ten-week iteration in Phase IV in which a Project Team validates and refines an idea in five steps, from Step 1: Setup to Step 5: Decide. Each sprint ends with a clear decision: stop, iterate or go.

• Strategy: Your path for getting from today to your picture of the future, developed in Phase I together with the measurement of success and progress. "We want to become No. 1 in our industry" is not a strategy; it is a goal.

• System Playbook: A brief document that describes all essential parts of your innovation management system: who decides what, how projects move from one phase to the next, which budget they draw on and what they deliver. A new team member should be able to read it in an hour, so keep it to 40 slides or 25 pages (see System Playbook).

T

• Target Groups: Clusters of customers who show similar behaviour when choosing, buying or using products and services, for example in their price sensitivity or brand loyalty. We ignore demographics like age or income: a high income does not mean someone is ready to spend (see Target Groups).

• Team Coach: The expert in running and facilitating the Business Design process, working as trainer, mentor and coach. The team coach is not part of the project team and is responsible for the team's performance, not for its result (see Team Coach).

• Team Manager: The leader of the project team, accountable for its results together with all other team members. Think MacGyver: one person with a full overview of all activities, who works on content tasks like everyone else and drives the team to high performance (see Team Manager).

• Team Member: An active part of the project team who brings expertise in engineering, sales, marketing or finance and is accountable for the results of the innovation project. Team members are trained in Business Design before they join, prepare for and take part in every workshop and work on their own tasks in between (see Team Member).

• Threshold: The number that decides in advance when you are convinced that a hypothesis is true or false: "We are convinced if more than 50% of our customers…" No threshold, no validation – explore instead (see Validating Hypotheses).

V

• Validation: Testing a hypothesis against a clear threshold – or better, trying to falsify it – once you know enough about a field to phrase one. Surveys and other ways of collecting large amounts of data are typical methods (see Validating Hypotheses).

W

• Work Culture: In Business Design, culture is expected behaviour: what gets rewarded and what gets punished, felt by every employee even if it is rarely written down. If you want different behaviour, change what gets rewarded – nothing else works without that (see Work Culture).